Clarification of Deposit Insurance Coverage for Branches of U.S. Banks in the Federated States of Micronesia, the Marshall Islands, and Palau
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The FDIC has finalized a rule explicitly confirming that deposits held at branches of U.S.-insured depository institutions (IDIs) located in the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau are covered by federal deposit insurance. This rule eliminates prior ambiguity about whether FDIC coverage extended to these Pacific Island nations, which operate under Compacts of Free Association with the United States. The rule applies to all existing branches as well as any future branches that U.S.-insured banks may open in these three jurisdictions. It follows an interim final rule with a request for public comment that the FDIC issued in August 2024, and this final version incorporates any feedback received during that comment period. By formalizing insurance coverage, the FDIC aims to strengthen depositor confidence in these markets, support financial stability in the region, and ensure consistent treatment of U.S. bank operations across all Compact of Free Association territories. The rule provides legal certainty for both depositors and financial institutions operating in these jurisdictions.
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Key Changes
- FDIC formally confirms deposit insurance coverage extends to all U.S.-insured depository institution branches in the Federated States of Micronesia, Republic of the Marshall Islands, and Republic of Palau
- Coverage applies retroactively to all currently operating branches and prospectively to any future branches opened in these three jurisdictions
- Final rule supersedes the interim final rule with request for comment issued by the FDIC in August 2024
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