[Code of Federal Regulations]
[Title 12, Volume 2]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR204.133]

[Page 152-153]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS (REGULATION D)--Table of Contents
 
Sec. 204.133  Multiple savings deposits treated as a transaction account.

    (a) Authority. Under section 19(a) of the Federal Reserve Act, the 
Board is authorized to define the terms used in section 19, and to 
prescribe regulations to implement and prevent evasions of the 
requirements of that section. Section 19(b) establishes general reserve 
requirements on transaction accounts and nonpersonal time deposits. 
Under section 19(b)(1)(F), the Board also is authorized to determine, by 
regulation or order, that an account or deposit is a transaction account 
if such account is used directly or indirectly for the purpose of making 
payments to third persons or others. This interpretation is adopted 
under these authorities.
    (b) Background. Under Regulation D, 12 CFR 204.2(d)(2), the term 
``savings deposit'' includes a deposit or an account that meets the 
requirements of Sec.  204.2(d)(1) and from which, under the terms of the 
deposit contract or by practice of the depository institution, the 
depositor is permitted or authorized to make up to six transfers or 
withdrawals per month or statement cycle of at least four weeks. The 
depository institution may authorize up to three of these six transfers 
to be made by check, draft, debit card, or similar order drawn by the 
depositor and payable to third parties. If more than six transfers (or 
more than three third party transfers by check, etc.) are permitted or 
authorized per month or statement cycle, the depository institution may 
not classify the account as a savings deposit. If the depositor, during 
the period, makes more than six transfers or withdrawals (or more than 
three third party transfers by check, etc.), the depository institution 
may, depending upon the facts and circumstances, be required by 
Regulation D (Footnote 5 at Sec. 204.2(d)(2)) to reclassify or close the 
account.
    (c) Use of multiple savings deposits. Depository institutions have 
asked for guidance as to when a depositor may maintain more than one 
savings deposit and be permitted to make all the transfers or 
withdrawals authorized for savings deposits under Regulation D from each 
savings deposit. The Board has determined that, if a depository 
institution suggests or otherwise promotes the establishment of or 
operation of multiple savings accounts with transfer capabilities in 
order to permit transfers and withdrawals in excess of those permitted 
by Regulation D for an

[[Page 153]]

individual savings account, the accounts generally should be considered 
to be transaction accounts. This determination applies regardless of 
whether the deposits have entirely separate account numbers or are 
subsidiary accounts of a master deposit account. Multiple savings 
accounts, however, should not be considered to be transaction accounts 
if there is a legitimate purpose, other than increasing the number of 
transfers or withdrawals, for opening more than one savings deposit.
    (d) Examples. The distinction between appropriate and inappropriate 
uses of multiple accounts is illustrated by the following examples:

    Example 1. (i) X wishes to open an account that maximizes his 
interest earnings but also permits X to draw up to ten checks a month 
against the account. X's Bank suggests an arrangement under which X 
establishes four savings deposits at Bank. Under the arrangement, X 
deposits funds in the first account and then draws three checks against 
that account. X then instructs Bank to transfer all funds in excess of 
the amount of the three checks to the second account and draws an 
additional three checks. Funds are continually shifted between accounts 
when additional checks are drawn so that no more than three checks are 
drawn against each account each month.
    (ii) Suggesting the use of four savings accounts in the name of X in 
this example is designed solely to permit the customer to exceed the 
transfer limitations on savings accounts. Accordingly, the savings 
accounts should be classified as transaction accounts.
    Example 2. (i) X is trustee of separate trusts for each of his four 
children. X's Bank suggests that X, as trustee, open a savings deposit 
in a depository institution for each of his four children in order to 
ensure an independent accounting of the funds held by each trust.
    (ii) X's Bank's suggestion to use four savings deposits in the name 
of X in this example is appropriate, and the third party transfers from 
one account should not be considered in determining whether the transfer 
and withdrawal limit was exceeded on any other account. X established a 
legitimate purpose, the segregation of the trust assets, for each 
account separate from the need to make third party transfers. 
Furthermore, there is no indication, such as by the direct or indirect 
transfer of funds from one account to another, that the accounts are 
being used for any purpose other than to make transfers to the 
appropriate trust.
    Example 3. (i) X opens four savings accounts with Bank. X regularly 
draws up to three checks against each account and transfers funds 
between the accounts in order to ensure that the checks on the separate 
accounts are covered. X's Bank did not suggest or otherwise promote the 
arrangement.
    (ii) X's Bank may treat the multiple accounts as savings deposits 
for Regulation D purposes, even if it discovers that X is using the 
accounts to increase the transfer limits applicable to savings accounts 
because X's Bank did not suggest or otherwise promote the establishment 
of or operation of the arrangement.

[57 FR 38427, Aug. 25, 1992]