Custodial Institution

"Custodial Institution" is an entity that holds Financial Assets for the account of others as a substantial portion of its business. Here are the key points:

• Definition: A custodial institution is any entity that primarily holds financial assets for others.
• Substantial Portion: Holding financial assets for others must be a significant part of the entity's business.
• Income Threshold: To determine if an entity meets the substantial portion requirement, its gross income attributable to holding financial assets and related financial services must equal or exceed 20% of its gross income during the calculation period.
• Calculation Period: The calculation period is the shorter of either:
  • The three-year period ending on December 31 (or the final day of a non-calendar year accounting period) before the year in which the determination is being made.
  • The period during which the entity has been in existence.

By applying this definition and income threshold, regulators can identify entities that primarily function as custodial institutions due to their significant involvement in holding financial assets for others.