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).
House Passes Cannabis Banking Bill
On September 25, 2019, the U.S. House of Representatives passed H.R. 1595, the Secure and Fair Enforcement Banking Act of 2019 (the “SAFE Banking Act”), by a vote of 321-103. The SAFE Banking Act faces uncertainty in the Senate. The SAFE Banking Act creates a safe harbor under federal law for depository institutions that offer financial services to a “cannabis-related legitimate business or service provider.” The safe harbor prohibits a federal banking regulator from terminating or limiting deposit insurance, penalizing the depository institution, or recommending that the financial institution not offer account services to such a business. Additionally, the bill also adds language to 31 U.S.C. § 5318(g) of the Bank Secrecy Act related to suspicious activity reports (“SARs”) for cannabis-related legitimate businesses, which directs the Secretary of the Treasury to issue guidance consistent with the SAFE Banking Act. Finally, the bill directs the filing of reports by federal banking regulators and the Government Accountability Office (“GAO”) regarding access to financial services for minority-owned and women-owned cannabis-related legitimate businesses, and another study by the GAO on the effectiveness of SARs filed on cannabis-related businesses.
FinCEN Director Speaks at FedID Forum and Exposition
Kenneth A. Blanco, Director of the Financial Crimes Enforcement Network (“FinCEN”) delivered prepared remarks at the 2019 Federal Identity (FedID) Forum and Exposition in Florida. Therein, Director Blanco discussed how illicit actors leverage identity to commit criminal acts and how FinCEN uses identity to protect national security. Director Blanco wants the private sector to work with the government to better utilize the huge troves of data maintained by companies like data brokers to help law enforcement “understand someone’s risk profile for being involved in illicit activity or other threats.” He also detailed and warned against vulnerabilities to criminal schemes such as account takeovers and business email compromise fraud that target financial institutions and their customers.
Director Blanco closed his remarks by discussing emerging technologies related to identity, and how such technology could strengthen law enforcement efforts. He noted that FinCEN strongly supports responsible innovation related to digital identity solutions in the financial sector, and that recent FinCEN Innovation Hours have provided FinCEN with opportunities to learn about these developments.
Kansas City Federal Reserve President Discusses Federal Reserve Real Time Payment System
Esther George, the President of the Kansas City Federal Reserve recently appeared before the Senate Banking Committee to discuss the FedNow Service, the Federal Reserve’s real-time payments system announced in August 2019. We discussed the announcement here. At the hearing, George supported the FedNow Service, pointing to the “Federal Reserve’s history of operating payment services across a variety of rails.”
Another witness at the hearing was the Executive Managing Director of The Clearing House, which operates the currently-available RTP Network. He argued that the FedNow Service was premature and unnecessary as the RTP Network is performing well, meeting real-time payments needs in the US, and adoption in the RTP Network is increasing. Congressman Denver Riggleman (R-VA) shared a similar opinion where he highlighted a bill he recently introduced that imposes transparency requirements and expressed concern that the Federal Reserve’s own version of a faster payments system will face issues regarding transparency, conflicts of interest resulting from the Federal Reserve competing with the RTP system while simultaneously supervising and regulating it, and not knowing how the Federal Reserve’s new system will work.