Fintech Week in Review: Week of January 10, 2020

Weekly Fintech Focus

  • CA DBO cracks down on point-of-sale financing. Companies that offer deferred payment options at point-of-sale could be lenders in California.
  • The White House issues the world’s first binding guidance on regulating AI. Agencies should take a light-touch approach and consider how regulations promote the growth of AI.
  • State money transmission laws are in flux. Rhode Island just combined its laws governing electronic money transfers and sale of checks into one regime.
  • The FTC brought an action against a fuel card company for hidden fees.
  • The FTC announced that its recent data security orders will inform how it issues orders going forward, including more specific requirements for companies implementing safeguards to correct problems, more accountability for third-party assessors, and C-Suite compliance attestations for the company’s data security programs.

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Fintech Week in Review: Week of December 13 & 20, 2019

FinCEN Director Discusses How FinCEN Uses BSA Data and the BSA Value Project

The Director of the Financial Crimes Enforcement Network (FinCEN), Kenneth A. Blanco, delivered prepared remarks at the American Bankers Association/American Bar Association Financial Crimes Enforcement Conference this week.  Mr. Blanco spoke on five key topics: (1) how FinCEN uses Bank Secrecy Act (BSA) data, (2) the status of the BSA Value Project, (3) the importance of beneficial ownership information, (4) the federal banking agency working group efforts, and (5) the realignment of FinCEN’s organizational structure. Continue Reading

Fintech Week in Review: Week of December 6, 2019

CFPB Proposes to Expand Certain Remittance Transfer Safe Harbors

To reduce compliance costs for certain banks, credit unions and other insured financial institutions, the Consumer Financial Protection Bureau (CFPB) proposed amendments to Regulation E to increase the safe-harbor available to insured financial institutions that provide a limited amount of remittance transfers from being categorized as a remittance transfer service provider.  Under the proposal, the limit on remittances would be raised from the current limit of 100 or fewer transfers in the prior year to 500 or fewer transfers.  Remittance transfers are generally defined as electronic transfers of money from a consumer in the United States to an international location. Continue Reading

Fintech Week in Review: Week of November 22, 2019

The Fed Chairman Comments on Potential for a US-backed Digital Currency

Jerome Powell, Chairman of the Federal Reserve, wrote to Congress this week discussing the merits of implementing a central bank digital currency (CBDC) in the U.S. The letter responds to a number of questions posed by lawmakers regarding the value that a digital currency would provide and implementation challenges that would need to be overcome. Two Congressmen had expressed concern that the U.S. is being left behind in the wake of technological advances.

Chairman Powell indicates that the U.S. is not currently developing a CBDC, but the Fed is monitoring development elsewhere. Chairman Powell noted that some of the motivating factors for  a digital currency in foreign countries do not necessarily exist in the U.S. Specifically, the demand for cash in the U.S. “remains robust” and there are fast and reliable digital payment services available that are not available in certain other countries. Continue Reading

Fintech Week in Review: Week of November 15, 2019

California Prohibits Clinics from Using Deferred Interest Provisions

California signed into law SB-639 that prohibits medical and veterinary clinics and their agents and employees from establishing open-end credits or loans that include deferred interest provisions in an effort to protect patients and pet owners from signing up for certain credit, including credit products that accrue interest during a 0% introductory period. Additionally, clinics and their agents and employees cannot complete any portion of an application for credit or a loan for the patient or arrange for or establish an application that has not been completely filled out by the patient.

Senator Holly Mitchell commented on the new law that she co-authored stating “while third-party financing may have a place when patients need services they can’t immediately afford, products with deferred interest clauses have no place in medical practice.” Continue Reading

Fintech Week in Review: Week of November 1, 2019

House Financial Services Subcommittee Hearing on Discrimination Against LGBTQ+ in Lending and Housing

The House Financial Services Subcommittee on Oversight and Investigations held a hearing this week on the extent and effects of discrimination against persons who identify as lesbian, gay, bisexual, transgender, or queer (LGBTQ+) when seeking housing or credit in the United States. A recording of the hearing has been made available online.

Testimony by Alphonso David, President of the Human Rights Campaign, Harper Jean Tobin, Director of Policy for the National Center for Transgender Equality, and others painted a bleak picture of the economic insecurity confronting LGBTQ+ communities. Their testimony attested to the correlation of lower household incomes to lower utilization of basic banking products, such as checking and savings accounts, LGBTQ+ communities face economic insecurity to a greater degree than their non-LGBTQ+ peers. Witnesses testified that factors contributing to this economic insecurity include lack of universal protection against housing discrimination, lack of equal access to benefits for same-sex partners, and lack of family support.

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Fintech Week in Review: Week of October 18, 2019 and Week of October 25, 2019

Federal Judge Rules the OCC Lacks Authority to Issue Fintech Bank Charters

U.S. District Judge Victor Marrero approved a final judgment in favor of the New York Department of Financial Services (NYDFS) that sets aside the Office of the Comptroller of the Currency’s (OCC) special-purpose chartering regulation for certain non-depository fintech applicants seeking a limited-service national bank charter (the Fintech Charter).

The OCC has claimed authority to issue Fintech Charters through (i) its leeway to interpret the term “business of banking” under the National Bank Act; (ii) its authority to issue limited purpose national charters under 5 C.F.R. § 5.20(e)(1)(i); and (iii) its authority to interpret the term “business of banking” in such a way that it can grant a special-purpose banking charter to a company that is engaged in any one of the three core banking functions: receiving deposits, paying checks, or lending money. Given its interpretation of its authority, the OCC did not go through the Administrative Procedure Act (APA) rulemaking process when initiating the Fintech Charter process.

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Fintech Week in Review: Week of October 11, 2019

OCC to Host Innovation Office Hours During Money20/20

On October 28, 2019, the Office of the Comptroller of the Currency (“OCC”) will hold Innovation Office Hours in Las Vegas, Nevada at The Venetian Hotel during the Money20/20 conference (October 27-30).

During the Innovation Officer Hours, the OCC’s Office of Innovation staff meets one-on-one with fintech firms and other companies that partner with banks to discuss new products or services to facilitate responsible innovation in the federal banking system.  You can request an Office Hours session here until October 18, 2019. Continue Reading

Fintech Week in Review: Week of October 4, 2019

Increase to the Management Interlock Threshold Rule Approved

The Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System (the “Federal Reserve”), and the Federal Deposit Insurance Corporation (“FDIC”) approved a change to the thresholds in the major assets prohibition for management interlocks stated in the Depository Institution Management Interlocks Act (“DIMIA”). Prior to the final rule, the DIMIA prohibited a management official of a depository organization that had total assets exceeding $2.5 billion from simultaneously serving as a management official of an unaffiliated depository organization that had total assets exceeding $1.5 billion (referred to as the “major assets prohibition”). The approved change now increases the respective $2.5 billion and $1.5 billion thresholds to $10 billion each. Continue Reading

Fintech Week in Review: Week of September 27, 2019

CFPB and FTC to Host Credit Reporting Accuracy Workshop

The Federal Trade Commission (“FTC”) and the Consumer Financial Protection Bureau (“CFPB”) recently announced that they will be hosting a public workshop on December 10, 2019 to discuss issues related to the accuracy of credit reports and background screening reports for employment and housing rental purposes. The FTC published a study on accuracy in credit reporting in 2012, the same year the CFPB began supervising large credit reporting agencies (“CRAs”) and furnishers of credit reports. Additionally, a 2015 multi-state settlement required CRAs to follow stricter standards for accuracy in credit reports. The workshop will include numerous stakeholders, including industry representatives, consumer advocates, and regulators. Comments may be submitted to the FTC until January 10, 2020 about topics for discussion during the workshop. If you would like to review any comment with us, please contact Sam Boro (SBoro@perkinscoie.com) or Nick Lundgren (NLundgren@perkinscoie.com). Continue Reading

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