In accounting, "off-balance-sheet" (OBS), or incognito leverage, usually describes an asset, debt, or financing activity not on the company's balance sheet.
Under previous accounting rules both in the United States (U.S. GAAP) and internationally (IFRS), operating leases were off-balance-sheet financing.
Under current accounting rules (ASC 842, IFRS 16), operating leases are on the balance sheet.
The formal accounting distinction between on- and off-balance-sheet items can be quite detailed and will depend to some degree on management judgments, but in general terms, an item should appear on the company's balance sheet if it is an asset or liability that the company owns or is legally responsible for; uncertain assets or liabilities must also meet tests of being probable, measurable and meaningful.
If the customer chooses to transfer the deposit to a money market mutual fund account sponsored by the same bank, the $1 million would not be a liability of the bank, but an amount held in trust for the client (formally as shares or units in a form of collective fund).