Clarification of Deposit Insurance Coverage for Branches of U.S. Banks in the Federated States of Micronesia, the Marshall Islands, and Palau

March 23, 2026 / Source: Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) is adopting a final rule to provide that the FDIC will insure deposits of all branches of U.S.-insured depository institutions (IDIs) in the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau, whether operating presently or in the future. This final rule follows an interim final rule with request for comment issued by the FDIC in August 2024.

The final rule removes the reference to “legacy branches” in the FDIC’s regulations. Under the amended rule, all branches of U.S. IDIs in the Freely Associated States, whether present or future, are not considered to be offices located outside any State for purposes of deposit insurance coverage. As a result, dually payable deposits of all branches of U.S.-chartered banks in the Freely Associated States, whether present or future, will be insured by the FDIC.

Providing deposit insurance to all branches of U.S. IDIs in the Freely Associated States achieves the FDIC’s intent to align its deposit insurance regulations with the historical availability of FDIC deposit insurance in the Freely Associated States. The final rule also puts U.S. IDIs operating in the Freely Associated States on equal footing with IDIs chartered by the Freely Associated States. Further, removing a limitation that may have served as a barrier to entry will support a competitive banking environment in the Freely Associated States. Additionally, the FDIC does not have a clear rationale to limit deposit insurance only to existing branches of U.S. IDIs and not new branches of U.S. IDIs.

The final rule is effective April 22, 2026.