Are pass-through correspondents required to pass the interest they receive back to their respondents?
Pass-through correspondents may pass the interest they receive on balances that represent their respondents’ required reserve balances and excess balances, but they are not required to do so. Passing back such interest to a respondent will not be considered a payment of interest on a demand deposit in violation of Regulation Q (“Prohibition Against Payment of Interest on Demand Deposits,” 12 CFR Part 217).
