Banking, USA updates

Court permits New York DFS suit against OCC regarding fintech charter
Sidley Austin LLP
  • USA
  • 24 May 2019

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.

Volcker Rule: agencies propose to implement community bank exemption and revise name-sharing rule
Sidley Austin LLP
  • USA
  • 18 January 2019

The five US federal agencies responsible for implementing the Volcker Rule have individually released a related notice of proposed rulemaking. The notice proposes amendments to the Volcker Rule regulations that would implement two statutory changes required by the Economic Growth, Regulatory Relief and Consumer Protection Act. Comments in response to the notice must be received by the agencies within 60 days of its publication in the Federal Register.

US election results: five key matters for financial services industry
Sidley Austin LLP
  • USA
  • 07 December 2018

In the recent election, the Democrats captured a majority in the House of Representatives and Representative Maxine Waters (D-Calif) is now in line to lead the House Financial Services Committee. As such, it is expected that a significant shift in legislative efforts relating to the financial services industry will occur. During the first Financial Services Committee hearing since the election, Waters announced that deregulation efforts are finished.

New York State Department of Financial Services challenges OCC authority on fintech charters
Sidley Austin LLP
  • USA
  • 12 October 2018

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.

OCC to issue fintech charters
Sidley Austin LLP
  • USA
  • 24 August 2018

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.

New FAQs on customer due diligence requirement
Sidley Austin LLP
  • USA
  • 04 May 2018

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.

Federal Reserve revises FR Y-7 and responds to questions on enhanced prudential standards for FBOs
Sidley Austin LLP
  • USA
  • 16 February 2018

The Board of Governors of the Federal Reserve System has announced revisions to the Annual Report of Foreign Banking Organisations (FR Y-7) which will enable foreign banking organisations (FBOs) to certify their compliance with US risk committee and home country capital stress testing requirements under Regulation YY. The FR Y-7 is an annual report submitted by qualifying FBOs to provide financial, organisational, shareholder and managerial information to the board.

California credit card surcharge prohibition found unconstitutional on First Amendment grounds
Sidley Austin LLP
  • USA
  • 26 January 2018

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.

CFPB principles for data aggregation services could have broad implications
Sidley Austin LLP
  • USA
  • 08 December 2017

The Consumer Financial Protection Bureau recently released a set of consumer protection principles designed to protect consumer interests in the market for services built around consumer-approved use of financial information. The principles are targeted at so-called 'data aggregation' or 'screen scraping' services that collect customer information in order to provide financial planning or other services.

Volcker Rule: OCC requests public input on potential revisions
Sidley Austin LLP
  • USA
  • 29 September 2017

The US Office of the Comptroller of the Currency (OCC) recently released a notice seeking public input regarding how to revise the Volcker Rule. The notice cites a report released by the US Treasury Department, which included recommendations for significant changes to the rule. Although the OCC did not propose specific changes to the rule in its notice, it stated that the information that it is soliciting could support the revisions to the final rule advanced in the Treasury report and elsewhere.

CFPB proposes amendments to final rule for pre-paid accounts
Sidley Austin LLP
  • USA
  • 21 July 2017

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.

Treasury releases report to reform US financial system
Sidley Austin LLP
  • USA
  • 14 July 2017

The Treasury Department recently released its long-awaited report to reform the US financial system. The report includes dozens of recommendations to reform laws, treaties, regulations, guidance, reporting and recordkeeping requirements and other government policies that inhibit federal regulation of the financial system in a manner consistent with the set of core principles enunciated by President Trump in Executive Order 13772.

OCC issues third-party relationship FAQs
Sidley Austin LLP
  • USA
  • 07 July 2017

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.

Former MoneyGram CCO settles FinCEN complaint
Sidley Austin LLP
  • USA
  • 26 May 2017

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.

Trump executive actions forecast major potential changes to financial industry regulation
Sidley Austin LLP
  • USA
  • 17 February 2017

President Trump recently issued two executive actions which constitute the first official statements on how his frequent criticism of the Dodd-Frank Act and the broader financial regulatory climate following the financial crisis may be translated into actual reform efforts. The executive order sets out core principles for regulatory reform without making any specific policy recommendations, while the memorandum directs the Department of Labour to re-examine its 2016 Fiduciary Duty Rule.

OCC moves forward with proposal to issue fintech charters
Sidley Austin LLP
  • USA
  • 23 December 2016

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.

Federal banking agencies request comment on enhanced cyber-risk management standards
Sidley Austin LLP
  • USA
  • 18 November 2016

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.

DC Circuit rules CFPB structure unconstitutional
Sidley Austin LLP
  • USA
  • 11 November 2016

In a significant setback for the Consumer Financial Protection Bureau, a panel of the DC Circuit recently held that its structure violates the Constitution and invalidated its order to impose a $109 million civil penalty and broad injunctive relief on mortgage lender PHH for alleged violations of the Real Estate Settlement Procedures Act.

Consumer Financial Protection Bureau finalises consumer protections for pre-paid accounts
Sidley Austin LLP
  • USA
  • 28 October 2016

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.

Towards a national fintech charter: OCC proposes receivership rule for uninsured banks
Sidley Austin LLP
  • USA
  • 14 October 2016

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.

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