In late July, the FDIC, along with the Office of the Comptroller of the Currency and the Federal Reserve, raised concerns about banks' account reconciliation practices. They issued specific guidance requiring all banks under their jurisdiction to monitor and regularly reconcile any accounts they manage, regardless of the source or type of relationship. This action came after persistent issues with partner bank account reconciliation, which left thousands of clients unable to access hundreds of millions in third-party account balances following the bankruptcy of a fintech intermediary in April.

The FDIC and other regulators are expected to introduce new rules this month, reminding FDIC-insured institutions that they hold sole responsibility for any accounts and funds, regardless of third-party arrangements. This move will clarify the responsibilities of banks involved in embedded finance and "for benefit of" (FBO) relationships with fintech companies. The recent Synapse Financial Technologies bankruptcy exposed the risks in these partnerships, leaving many customers unable to access their funds for months, causing significant financial distress.

Synapse, a San Francisco-based fintech that facilitated banking services for multiple fintech companies, declared bankruptcy in April 2024, affecting over 100 online financial service providers. Banks such as Evolve Bank and Trust, AMG National Trust, Lineage Bank, and American Bank were left holding more than $250 million in funds related to Synapse's services. Although the amount of unreconciled funds has been reduced, it still stands between $65 and $95 million, according to the latest bankruptcy trustee report. This crisis has led to a heightened focus on reconciliation and monitoring requirements by federal regulators, aiming to prevent similar incidents in the future.