A federal district judge recently denied a motion to dismiss filed by the US Office of the Comptroller of the Currency (OCC) in a lawsuit brought by the New York State Department of Financial Services, which challenged the OCC's decision to begin accepting applications from fintech companies for special purpose national bank charters.
In July 2018 the Office of the Comptroller of the Currency (OCC) announced its decision to begin accepting applications from fintech companies for special purpose national bank charters (the Fintech Charter Decision). The New York State Department of Financial Services recently filed a federal court complaint seeking to enjoin further actions by the OCC to implement the Fintech Charter Decision and related actions, arguing that such acts are lawless, ill-conceived and destabilising for financial markets.
The Office of the Comptroller of the Currency (OCC) recently announced – to much anticipation – that it will begin accepting applications from fintech companies for special purpose national bank charters (commonly referred to as 'fintech charters'). However, state banking regulators are likely to once again challenge the OCC's authority to grant fintech charters, which could create some uncertainty for early applicants.
The Financial Crimes Enforcement Network recently issued new frequently asked questions regarding its customer due diligence (CDD) rule. The CDD rule applies to banks, among others, and includes four core elements of CDD, each of which should be included in anti-money laundering programmes.
The US Court of Appeals for the Ninth Circuit recently held that California's statute prohibiting credit card surcharges violated the First Amendment as applied to the proposed surcharge practices of the merchant-plaintiffs. The Ninth Circuit used the same reasoning as a recent Supreme Court case to hold that California's surcharge ban regulated speech rather than conduct, therefore posing First Amendment concerns.
The Consumer Financial Protection Bureau recently issued proposed amendments to its final rule to expand existing consumer protections for electronic fund transfers to pre-paid accounts. Among other things, the proposal would modify the final rule to exempt pre-paid account issuers from the error resolution and limitation of liability provisions with respect to unregistered cardholders and provide more flexibility to issuers of digital wallet accounts that are covered by the final rule.
The Office of the Comptroller of the Currency recently issued a set of frequently asked questions (FAQs) to supplement its 2013 bulletin on third-party relationship risk management. The FAQs affirm the bulletin's broad applicability, while re-emphasising the need for third-party relationship oversight to be risk based and tailored to individual institutions' needs and delving into several more detailed compliance questions.
The former chief compliance officer of MoneyGram, Thomas E Haider, and the Financial Crimes Enforcement Network (FinCEN) have jointly filed a stipulation and order of settlement and dismissal in the US District Court of Minnesota. This follows FinCEN's earlier-filed complaint against Haider seeking to hold him personally liable for MoneyGram's violations of the Bank Secrecy Act and its implementing regulations.
The Office of the Comptroller of the Currency (OCC) has confirmed its intention to explore issuing limited-purpose national bank charters to financial technology (fintech) firms engaged in banking activities, commonly called 'fintech charters'. Earlier this year, the OCC had signalled this possibility; now, through the release of a policy paper and a speech by the comptroller, it has taken a more formal step.
The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation recently issued a joint advanced notice of proposed rulemaking regarding enhanced cyber-risk management standards for certain entities. The enhanced standards would establish increased supervisory expectations for the entities and services that potentially pose a heightened cyber-risk to the safety and soundness of the financial sector.
The Consumer Financial Protection Bureau recently issued its final rule to extend consumer protections to most pre-paid accounts and to extend certain other protections for credit cards to pre-paid accounts that are associated with certain lines of credit or overdraft credit plans. The rule will cover reloadable and non-reloadable plastic pre-paid cards, certain mobile wallets and electronic accounts that hold pre-paid value and the financial institutions that issue such pre-paid accounts.
The Office of the Comptroller of the Currency recently published a notice of proposed rulemaking and a request for public comment introducing a regulatory regime to govern the receivership of national banks. While the proposed rule would apply to the existing pool of 52 uninsured national trust banks, its broader impact would be to establish a receivership regime that supports the creation of new forms of limited purpose, uninsured banks for the financial technology industry.
The New York State Department of Financial Services recently issued a final rule setting out the minimum requirements for transaction monitoring and filtering programmes used by regulated institutions to monitor potential Bank Secrecy Act and anti-money laundering violations, suspicious activity reporting and sanctions violations. It also requires regulated institutions to confirm annually that all necessary steps have been taken to ensure compliance.
The Financial Crimes Enforcement Network has published a final rule that formalises new and existing customer due diligence requirements for banks (including branches and agencies of foreign banks in the United States), broker-dealers in securities, mutual funds, futures commission merchants and introducing brokers in commodities. This is intended to promote a more level playing field across and within financial sectors.
The federal banking agencies and the Financial Crimes Enforcement Network recently published interagency guidance to issuing banks on the application of the joint regulations implementing customer identification programme (CIP) requirements to their prepaid cards. The guidance clarifies that a bank should apply its CIP to the cardholders of certain prepaid cards issued by the bank and other prepaid access devices that meet the criteria in the guidance.
The Division of Consumer Services of the Department of Financial Institutions in the State of Washington recently issued an interpretation providing that merchant payment processing constitutes money transmission under the Washington Uniform Money Services Act. The interpretation concludes that merchant payment processors are subject to licensing and other requirements under the act unless a waiver is granted by the department.
The District Court for the District of Minnesota recently denied the motion of defendant Thomas E Haider to dismiss the federal government's complaint seeking to hold Haider personally liable for violations of the Bank Secrecy Act and its implementing regulations by MoneyGram International Inc during his tenure there as chief compliance officer. The parties have been ordered to appear for a pre-trial conference.
A new anti-money laundering regulation was recently proposed that would apply to banking institutions that are chartered or licensed under the New York Banking Law. It sets forth the minimum attributes of a robust transaction monitoring and watch list filtering programme for detecting illegal transactions, and requires an institution's senior compliance officer to certify annually that it has sufficient programmes in place to comply with the regulation.
The Conference of State Bank Supervisors has issued its Model Regulatory Framework for State Regulation of Certain Virtual Currency Activities to assist states in developing regulatory approaches to licensing and supervising virtual currency activities. The model framework is a high-level outline that will require substantial elaboration as individual states attempt to use it to guide their own rule-writing efforts.
The New York State Department of Financial Services (DFS) recently released its final BitLicence rules to regulate virtual currency businesses. Nearly all the changes in the final rules are of a technical or clarifying nature. However, the final rules eliminate the obligation to file transaction reports and suspicious activity reports with the DFS where such reports already must be filed with the federal government.
Virtual currency exchanger Ripple Labs Inc and its wholly owned subsidiary XRP II LLC recently entered into a consent agreement with the Financial Crimes Enforcement Network in which Ripple consented to a $700,000 civil penalty and admitted that it had failed to register as a money services business (MSB). This was the first civil enforcement action against a virtual currency exchanger for failing to register as an MSB.
The New York State Department of Financial Services (DFS) has issued a revised version of its proposed 'BitLicence' regulatory framework for public comment, amending the original rules proposed in July 2014. While the DFS has responded to comments on a number of key elements of the regulations and has taken steps to make the revised regulations more workable for the industry, other issues remain.
The US Financial Crimes Enforcement Network recently filed a civil complaint against Thomas Haider, former chief compliance officer for MoneyGram International Inc. The complaint seeks monetary and injunctive relief from Haider in his personal capacity, alleging a wilful failure to implement an effective anti-money laundering compliance programme and properly file suspicious activity reports.
The Consumer Financial Protection Bureau recently issued a far-reaching proposal to extend consumer protections to most pre-paid cards and accounts. The proposed rule would also extend protections for credit cards to pre-paid cards and accounts that are associated with lines of credit or overdraft credit plans.
The Financial Crimes Enforcement Network (FinCEN) has issued two administrative rulings on companies engaged in virtual currency activities. Companies engaged in activities involving virtual currencies should note that FinCEN does not recognise the exchange of virtual currency as a non-money transmission related service.
The Financial Crimes Enforcement Network has published a notice of proposed rulemaking in the Federal Register pertaining to the development of customer due diligence requirements that would be applicable to banks, broker dealers, mutual funds and futures commission merchants and introducing brokers in commodities. The proposed rule focuses on the four core elements of customer due diligence.
The New York State Department of Financial Services (DFS) recently issued for public comment its proposed 'BitLicense' regulatory framework and an accompanying press release. The release of the proposed regulations follows the announcement that the DFS would consider proposals and applications in connection with the establishment of virtual currency exchanges in New York.
The Financial Crimes Enforcement Network (FinCEN) recently published five administrative rulings, providing additional information on how exemptions from money transmitter status may or may not apply to certain business models under the regulations promulgated by FinCEN under the Bank Secrecy Act.
The Financial Crimes Enforcement Network (FinCEN) has published rulings regarding whether companies engaged in 'mining' software development and investment with respect to virtual currencies must register as money services businesses. The rulings provide insight on how FinCEN will interpret the recent regulations and guidance.
The Consumer Financial Protection Bureau (CFPB) has issued a proposed rule that would permit it to supervise non-bank international money transfer providers that satisfy the proposed rule's definition of 'larger participant'. The rule's impetus is to provide the CFPB with supervisory authority to ensure that non-bank international money transfer providers adhere to consumer protection rules for international remittances.
The Federal Reserve System's new Guidance on Managing Outsourcing Risk is the most recent publication in a series of supervisory and enforcement actions by federal regulators of financial institutions clarifying regulatory expectations with respect to outsourcing and selection and management of third-party service providers. It describes the heightened regulatory scrutiny that now applies to the outsourcing activities of covered financial institutions.
The US District Court for the District of Columbia has granted summary judgment in NACS v Board of Governors of the Federal Reserve System, ruling in favour of a group of retailers and retailer trade associations in a lawsuit in which those parties sought to overturn the final rule of the board of governors of the Federal Reserve System that set standards for debit card interchange transaction fees and network exclusivity prohibitions.
The Financial Crimes Enforcement Network recently issued guidance on how the Bank Secrecy Act applies to users, administrators and exchangers of 'convertible virtual currency'. Companies engaged in activities involving such currencies should assess the impact of the guidance on their obligations. Administrators and exchangers of such currencies should re-evaluate their status under money transmitter licensing laws.
The Federal Financial Institutions Examination Council has issued a request for comment on proposed guidance entitled "Social Media: Consumer Compliance Risk Management Guidance". Once finalised, institutions will be expected to use the guidance in developing and implementing risk management policies and practices to manage and control risks associated with social media.
The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have proposed amending their general capital rules to increase their risk sensitivity by revising the methodology for computing a banking organisation's total risk-weighted assets (the denominator of the banking organisation's risk-based capital ratios).
The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation recently released three proposed rules and one final rule (the market risk rule) which would substantially revise the federal banking agencies' current capital rules. Comments on the proposals are due by September 7 2012.
The Financial Crimes Enforcement Network recently published in the Federal Register an advance notice of proposed rulemaking pertaining to the development of a customer due diligence regulation applicable to banks, brokers and dealers in securities, mutual funds and futures commission merchants which focuses on the collection of beneficial ownership information about account holders
The Financial Crimes Enforcement Network (FinCEN) recently released a set of frequently asked questions (FAQs) to assist providers and sellers of pre-paid access in understanding certain aspects of the final pre-paid access rule that FinCEN issued earlier in 2011. FinCEN makes clear that the FAQs provide interpretive guidance only, and do not supersede any aspect of the pre-paid access rule.
The Financial Crimes Enforcement Network recently published a final rule that revises the Bank Secrecy Act requirements currently applicable to money services businesses with regard to stored value products and services. The final rule renames 'stored value' as 'pre-paid access' and creates two new categories of money services business – providers of prepaid access and sellers of pre-paid access.
Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act amended the Electronic Fund Transfer Act to establish a disclosure and error resolution regime for consumers who use 'remittance transfer providers' to send remittances to recipients located in a foreign country. The Board of Governors of the Federal Reserve System has now issued proposed rules to implement these provisions.
The Financial Crimes Enforcement Network has released a proposed rule that would revise the Bank Secrecy Act requirements for money services businesses with regard to stored value products and services. The rule is intended to address "regulatory gaps that have resulted from the proliferation of prepaid innovations over the last ten years and their increasing use as an accepted payment method".
The Board of Governors of the Federal Reserve System has released its final rule regarding overdraft services. The rule creates an opt-in rule under which financial institutions may not charge overdraft fees to consumers in connection with automated teller machine transactions and one-off debit card transactions, unless the consumer has affirmatively consented to such fees.
The Federal Deposit Insurance Corporation (FDIC) has adopted its final Statement of Policy on the Acquisition of Failed Bank Depository Institutions. While the FDIC has relaxed some of the originally proposed restrictions, the statement still stands as a significant impediment to private equity financing of the resolution of failed institutions.
The Department of the Treasury's Financial Crimes Enforcement Network has released a proposed rule to revise its regulations regarding money services businesses under the Bank Secrecy Act. It intends to revise the existing definitions to clarify the scope of entities subject to regulation as money services businesses, but in so doing raises significant issues for the delineation of entities subject to the rule.
In a significant departure from its previous stance, the Federal Deposit Insurance Corporation (FDIC) has published notice of a new General Counsel's Opinion No 8 which addresses whether funds underlying stored-value cards and other non-traditional access mechanisms are to be considered deposits insured by the FDIC. The new opinion should be reviewed by all participants in stored-value programmes.
The Federal Reserve has issued guidance that further refines, clarifies and, to a limited extent, relaxes its prior positions on the circumstances under which it will find a minority equity investment in a bank or bank holding company to constitute a “controlling influence over the management or policies” of the bank or bank holding company.
The Office of Foreign Assets Control (OFAC) has issued an interim final rule to describe economic penalty enforcement procedures for banking institutions. The interim rule, which applies to 'banking institutions' (ie, depositary institutions supervised or regulated by a federal banking regulator), explains the procedures that OFAC will follow with respect to economic penalty violations.