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John Zasada, Compliance Consulting Director, Financial Institutions Group

On March 15, 2020, the Federal Reserve Board (Fed) announced it is reducing the reserve requirement ratio for net transaction accounts to zero percent effective March 26, 2020. While there are no changes to deposit reporting, it does mean there is no longer any difference between savings deposits and transaction accounts for reserve requirements purposes. Financial institutions are not required to reclassify savings deposits as transaction accounts, but you are permitted to make the change if existing account agreements do not prohibit it. Remember, accounts classified as savings deposits are subject to the six convenient transfer limits in Regulation D. In light of the COVID-19 crisis, the Fed encourages financial institutions to work with consumers, and one way to do that is to permit more than six convenient transfers on their accounts. If a financial institution does so, it must make sure to report such accounts as transaction accounts.