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.

Perkins Coie will be attending the Money20/20 conference and will be hosting a Hospitality suite in The Palazzo at The Venetian.  We will also be hosting a reception at SUSHISAMBA on the evening of Monday, October 28, 2019, which you can RSVP to here.  We look forward to seeing you at Money20/20 and will be ready to discuss your fintech innovations, even if you aren’t able to get on the OCC’s schedule.

CFPB Announces Task Force on Federal Consumer Financial Law

On October 11, 2019, the Consumer Financial Protection Bureau (“CFPB”) announced the establishment of a task force to examine federal consumer financial laws with the purpose of harmonizing and modernizing these laws.  The task force will culminate in a recommendation to CFPB Director Kraninger with ways to improve and strengthen consumer financial law and regulations.  The task force will also produce research and legal analysis of consumer financial laws to aid in harmonizing and modernizing the laws, and identifying areas where further research is needed.  The CFPB stated in its announcement that the task force is related to an earlier commission established by the Consumer Credit Protection Act in 1968.  The CFPB is accepting applications now for membership on the task force.

CSBS Releases MSB Model Law for Comment

The Conference of State Bank Supervisors (“CSBS”) is requesting comment regarding language for a proposed money services business (“MSB”) model law.  Drafted by the Non-Depository Supervisory Committee, the MSB model law is part of CSBS’ Vision 2020 campaign – a series of initiatives from the CSBS to modernize state regulation of non-banks and drive toward an integrated, 50-state licensing and supervisory system.  Currently, CSBS has released an executive summary of the model law, a chart of model law language by topic, overviews of various positions taken by the model law (including definitions, exemptions, and aspects of licensure requirements), and a discussion of a model for ensuring a licensed entity’s financial condition will support claims for losses.

The draft MSB model law is based on, and overlays, the Uniform Money Services Act and seeks to “[amend] language that has been inconsistently implemented or interpreted over time.” Key definitions, exemptions, and issues relating to control were a focus for the drafting committee.

To address the difficulties imposed by differing state definitions and interpretations of money transmission and its exemptions, the model law seeks to define a number of key terms.  Among the definitions included in the law are ones for Money, Money Transmission, Stored Value / Prepaid Access, Sale of Payment Instruments, and Virtual Currency.  The Executive Summary of the MSB model law indicates that controversy remains surrounding the current draft definitions for “Money” and “Virtual Currency.”

The MSB model law also attempts to harmonize common exemptions from money transmission licensure requirements.  In summary, the MSB model law exempts agents of the payee, insured prepaid cards, certain closed loop prepaid access, payment processors, and agents or service providers of banks.  The MSB model law does not yet take a position on the exempt status of payroll services providers or 1099 contractors.

To address the administrative burden that arises from differences in standards and procedures for changes in control, the working group has also standardized change of control triggers and the definition of controlling persons.  Control is defined in the draft using common language focused on ownership, power to elect officers and management, and influence over the company’s management.  And the draft change in control language requires licensees to apply for any change in control and includes a draft checklist for the application.  In the working group, extensive discussion surrounded change in control issues.  One outstanding controversy relates to uniform background check requirements for control persons, given that certain states have preexisting requirements.  Accordingly, comment is requested to clarify how states can leverage multistate licensing requirements that remove repetitive requirements, but do not pose additional risk.

After the public notice and comment period closes on November 1, the CSBS will review suggestions and make changes to the draft as necessary.  Once finalized, the model law will serve as a policy foundation for all other aspects of MSB regulation and supervision.

California Governor Signs Installment Rate Cap Bill

On October 10, 2019, California Governor Gavin Newsom signed into law the Fair Access to Credit Act, a bill that sets a rate cap of 36% plus the federal funds rate on installment loans between $2,500 to $10,000.  We discussed the bill here when it passed through the California legislature.