A deposit account control agreement (DACA), also known as a control agreement, is a tripartite agreement between a deposit client (the debtor), a client`s lender (the guaranteed party) and a bank. Even if a deposit-taking institution needs its own form of DACA, deposit-taking institutions must remain vigilant before signing when a lender or borrower and their advisor proceed with the DACA form. Often, other DACA parties will attempt to substantially amend the important provisions relating to the protection of the deposit-making institute, including the provisions relating to compensation, deposit and notice. Custodian institutions should review the amendments proposed by consultants familiar with the negotiation of DACAs from the perspective of a deposit-taking institution (i.e., includes banking, cash management transactions and deposits, as well as the importance of certain legal protections for depository establishment). Counsel for the conservation institute must inform the conservation institute of how the proposed amendments affect the respective rights and obligations of the parties under the DACA and the practical consequences of these changes on the relationship, business and operating teams of the custodian institution. In addition, the legal counsel of the deposit institute must have a deep understanding of what the market is and reject inappropriate requests from other parties that do not match the market. Deposit institutions should have an experienced internal team responsible for implementing all DACs. Relationship officers should not implement DAC, but should be informed of the importance of sending DACA applications through the filing institution`s DACA preparation, verification and enforcement protocol. As long as DACA is carefully prepared and negotiated adequately by the custodian`s advisor, incorrect implementation of a DACA is the primary source of exposure to a custodian institution. The custodian ensures that all necessary checks have been carried out on the corresponding deposit accounts and that the depository is ready to implement and implement all the instructions it receives within the time frame set by the DACA. Small depots, in particular, should be alert to the lack of key personnel and have safeguard procedures in place to ensure that DACA instructions are always implemented in a timely manner.
If the deposit establishment. B does not require exclusive control of deposit accounts within the DACA time frame, the deposit-taking institution may be held responsible for all withdrawals made by the borrower from the deposit accounts after the implementation of the exclusive control. UCC No. 9-104 — The “Single Code of Trade” section that deals with deposit account control. This section enhances the security interests on deposit accounts as an original guarantee. Active Deposit Account Control Agreement – A control agreement that orders the bank to accept the instructions of the secured party (not the debtor). Advanced Security Interests – During the execution of the DACA, the insured party will be granted an advanced security interest that granted it, under the Single Code of Commerce, exclusive rights to control the debtor`s deposit account. DACs are tripartite agreements between a lender (also known as a guaranteed party), a borrower and a custody institution. The purpose of a DACA is to allow a lender to take control of its borrower`s deposit accounts held by a deposit facility other than the lender, in order to allow the lender to enhance its security interest in deposit accounts. Some DACs are structured so that the lender has exclusive control over deposit accounts immediately after DACA der.