Insured Cash Sweep
The Insured Cash Sweep® or ICS® service is used by banks and savings associations that are insured by the Federal Deposit Insurance Corporation (FDIC). Financial institutions that are in the ICS Network can place the deposits received from their customers into interest-bearing savings accounts at other FDIC-insured banks in the Network.1 Banks can also place their customer funds into demand deposit accounts using the ICS demand option.2 Because the funds are placed at multiple banks across the Network in amounts that stay within the FDIC deposit insurance limit at each bank ($250,000), the customer is eligible for total amounts of deposit insurance that are greater than the standard insurance limit for any one bank.3
The customer's relationship bank sets the interest rate offered on the entire deposit amount, and the customer gets one statement from the bank covering the full amount of the deposit.4 The Bank of New York Mellon provides custody, settlement, and recordkeeping services for the ICS service.
ICS is referred to as a "sweep" service because the customer's funds are transferred from a transaction account at the relationship bank into the savings accounts at other banks in the ICS Network. Each customer may make up to six withdrawals per month in the amounts that have been placed into the savings at the other banks.5
The provider of the Insured Cash Sweep is Promontory Interfinancial Network, LLC which is based in Arlington Virginia.5 Promontory also offers the Certificate of Deposit Account Registry Service® or CDARS® service, and the Insured Network Deposit® or IND® service.6 The CDARS service allocates deposits in a way that is similar to the ICS service, but allocates the funds to time deposits (certificates of deposit or CDs) at other Network banks, whereas the ICS service allocates the funds to money market deposit accounts.
2 https://web.archive.org/web/20150905215118/https://www.bncbank.com/business-ics.htm> 3 http://www.ffsb.com/ics/ics-faq.aspx
5 Independent Bankers Association of Texas http://www.ibat.org/news/2012/03/09/insured-cash-sweep
6 Bloomberg Business Week https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=45817065/>
6 American Bankers Association, Corporation for American Banking, "ICS, or the Insured Cash Sweep Service Promontory Interfinancial Network." http://www.aba.com/Products/Endorsed/Pages/ICS.aspx>