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Category Archives: Regulatory Developments

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FDIC Brokered Deposits Final Rule: Key Aspects for Broker Dealers

Posted in Regulatory Developments

On January 22, 2021, the Federal Deposit Insurance Corporation (“FDIC”) published its final rule (“Final Rule”) revising and modernizing its regulations related to brokered deposits and the interest rate restrictions that apply to insured depository institutions (“IDIs”) that are less than well capitalized. Under Section 29 of the Federal Deposit Insurance Act, certain IDIs that are not… Read More

A Sign of Things to Come: The California DFPI Exercises Its New Authority in Regulating Earned Wage Access Products

Posted in Regulatory Developments

The law creating a new California mini-CFPB took effect on January 1, 2021, and a few weeks later, the California Department of Financial Protection and Innovation (DFPI) entered into “first-of-their kind” memoranda of understanding (MOUs), by which the DFPI will regulate earned wage access (EWA) products offered by five companies in California. These MOUs follow… Read More

OCC Permits National Banks and Federal Savings Associations to Use Independent Node Verification Networks and Stablecoins for Payment Activities

Posted in Regulatory Developments, Uncategorized

As part of the Office of the Comptroller of the Currency’s (OCC) declared effort to keep pace with a mounting demand for faster, cheaper, and more efficient payments, and the widespread adoption of new technologies, the agency’s Senior Deputy Comptroller & Chief Counsel issued an interpretive letter on January 4, 2021 (the “Interpretive Letter”) clarifying… Read More

The Anti-Money Laundering Act of 2020

Posted in Regulatory Developments

On New Year’s Day, Congress overrode President Trump’s veto of the National Defense Authorization Act (NDAA) for the 2021 fiscal year, turning the bill into law without requiring the president’s signature. The NDAA includes the Anti-Money Laundering Act of 2020 (AMLA), the first major reform of the 50-year-old United States anti-money laundering (AML) framework since the… Read More

CFPB Task Force Releases Recommendations for Improving Financial Services Consumer Protection

Posted in CFPB, Regulatory Developments

On January 5, 2021, the Consumer Financial Protection Bureau (CFPB or Bureau) Taskforce on Federal Consumer Financial Law (Task Force) released a report (Report) recommending changes designed to contemporize and strengthen consumer financial protections, encourage competition and innovation, and improve inclusion and access. The Report is the product of months of study and public outreach… Read More

FDIC Finalizes Supervisory Regime for Industrial Banks and their Controlling Shareholders

Posted in Regulatory Developments

On December 15, 2020, the Federal Deposit Insurance Corporation (“FDIC”) issued a final rule (“Final Rule”) setting forth standards to apply to controlling shareholders of industrial banks that are not subject to consolidated supervision by the Board of Governors of the Federal Reserve System. The Final Rule is substantially similar to the FDIC’s proposal announced… Read More

FinCEN Seeks to Expand Scope of Information Collection and Recordkeeping Requirements for Money Transmitters and other Financial Institutions

Posted in Regulatory Developments

A new proposed rulemaking (the “NPRM”) would lower the current $3,000 threshold for the applicability of the Bank Secrecy Act (“BSA”) Recordkeeping Rule and Travel Rule to $250 for covered funds transfers that begin or end outside the United States. This proposed change would—among other things—require nonbank financial institutions, such as money transmitters, to obtain… Read More

Is California’s Agent of a Payee Exemption Shrinking?

Posted in Regulatory Developments

Earlier this year, the California Department of Business Oversight (DBO) issued a draft rulemaking relating to the scope of the agent of a payee exemption (the “Exemption”) under the Money Transmission Act, Cal. Fin. Code § 2000 et seq. (MTA). As we observed at the time, the rulemaking affirms a broader interpretation of the scope of the Exemption… Read More

CFPB California Style: The California Consumer Financial Protection Law Brings More Providers of Consumer Financial Products and Services Into the Regulatory Tent

Posted in Regulatory Developments

On August 31, 2020, the California legislature passed the California Consumer Financial Protection Law (CCFPL). The law reflects Governor Newsom’s vision of a much more powerful banking agency with new registration authority, UDAAP authority mirroring the authority of the CFPB, and expanded enforcement authority. But important amendments adopted by the legislature will exempt many regulated… Read More

CFPB Issues RFI Seeking Information on the Impact of the CARD Act Regulations on Small Entities and on the Consumer Credit Card Market

Posted in Regulatory Developments

On August 28, 2020, the Consumer Financial Protection Bureau published a request for information to gather feedback on the economic impact on small entities of the rules that implement the Credit Card Accountability Responsibility and Disclosure Act of 2009, and a general review examining the consumer credit card market as a whole. Read our client… Read More

CFPB California Style: New Name Is Just the Start for a Much More Powerful Regulator

Posted in Regulatory Developments

California has become the latest state to create its own mini Consumer Financial Protection Bureau (CFPB). As part of the 2020-21 budget, Governor Gavin Newsom set in motion a reorganization and significant expansion of the authority of the California banking regulator, the Department of Business Oversight (DBO). This reorganization includes a new name (the “Department… Read More

Take Two: State AGs Target the FDIC’s Final Rule Reaffirming Valid-When-Made Doctrine

Posted in Regulatory Developments

Last week, the state attorneys general of seven states and the District of Columbia filed suit against the Federal Deposit Insurance Corporation (FDIC) challenging the FDIC’s final rule reaffirming the valid-when-made doctrine for loans originated by state-chartered federally insured banks.  The lawsuit was expected after three state attorneys general filed suit against the OCC challenging… Read More

Dropping Anchor in the (Safe) Harbor: Colorado “True Lender” Litigation Settles

Posted in Regulatory Developments

Ending years of litigation, the Colorado Attorney General and the Administrator of the Colorado Uniform Consumer Credit Code (“Administrator”) announced a settlement with marketplace lenders Avant of Colorado, LLC and Marlette Funding, LLC (together, the “Non-Bank Partners”), and their bank partners WebBank and Cross River Bank (together, the “Banks”). Under the terms of the settlement, the marketplace… Read More

Bitcoin Is “Money” for Purposes of D.C. Money Transmission Law, Says Federal Court

Posted in Regulatory Developments

A recent federal district court ruling in a criminal anti-money laundering case suggests that the transmission of virtual currency on behalf of another person requires a state money transmission license — even if the state’s money transmission law does not expressly address the regulation of virtual currency. This interpretation has the potential to significantly disrupt… Read More

CFPB Seeks Input on Improving Access to Credit

Posted in Regulatory Developments

On August 3, 2020, the Consumer Financial Protection Bureau (CFPB) published a Request for Information (RFI) that seeks comment on ways to clarify the Equal Credit Opportunity Act’s (ECOA) implementing regulation, Regulation B, to expand access to credit and improve protections against credit discrimination. According to the CFPB, comments provided in response to the RFI will help the… Read More

Not So Fast—State Attorneys General Seek to Enjoin OCC’s Final Rule Reaffirming “Valid When Made” Doctrine

Posted in Regulatory Developments

On July 29, 2020, the state attorneys general of California, Illinois, and New York filed suit against the Office of the Comptroller of the Currency (OCC) challenging the OCC’s Final Rule reaffirming the “valid when made” doctrine for loans originated by national banks.  The challenge extends the uncertainty created by the Second Circuit’s Madden decision… Read More

New York Passes Bill to Increase Transparency in Lending

Posted in Regulatory Developments

On July 23, 2020, in an effort to increase transparency in commercial financings so borrowers may make more informed decisions, the New York State legislature passed a bill, S5470B, which currently awaits the Governor’s signature. The bill requires certain commercial financing providers to disclose to recipients critical information about the amount, pricing, and terms of specific commercial… Read More

Will the True Lender Please Stand? – OCC Proposes “True Lender” Bright-Line Rule

Posted in Regulatory Developments

On July 20, 2020, the Office of the Comptroller of the Currency (OCC) issued a notice of proposed rulemaking that would establish when national banks or federal savings associations (collectively, banks) are the “true lender” making a loan in the context of a partnership between the bank and a third party.  Recognizing the uncertainty created by existing… Read More

Louisiana Becomes Second State to Require Virtual Currency Licensing

Posted in Regulatory Developments

Developments in virtual currency regulation have been top-of-mind with recently announced initiatives from the New York Department of Financial Services. Companies engaging in virtual currency activity should also, however, take note of Louisiana’s enactment of HB701. This law, which takes effect on August 1, 2020, is a broad standalone licensing regime for the regulation of… Read More

Machine Underwriting: The CFPB Issues Blog Post on Use of Artificial Intelligence in Credit Underwriting

Posted in CFPB, Regulatory Developments

On July 7, 2020, the Consumer Financial Protection Bureau (CFPB or Bureau) published a blog post on the use of artificial intelligence (AI), especially machine learning (ML), in credit underwriting. The blog post addresses industry concerns about how AI and ML models interact with the existing regulatory framework, specifically the adverse action notice requirements in the Equal Credit… Read More

FinCEN Guidance: How to Hemp

Posted in Regulatory Developments

The Financial Crimes Enforcement Network (FinCEN) released guidance on the Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations and considerations surrounding hemp-related customers. These customers include hemp growers, and processors and manufacturers that purchase hemp from such growers. The Guidance supplements a December 2019 interagency statement, summarized in our prior Client Alert, and outlines… Read More

Agencies Finalize Amendments to Volcker Rule Covered Fund Provisions

Posted in Regulatory Developments

On June 25, 2020, the five federal agencies with responsibility for implementing the Volcker Rule finalized amendments to the Volcker Rule’s provisions related to investing, sponsoring, and having certain relationships with “covered funds.”  The final rule is largely consistent with the agencies’ proposal of January 30, 2020 and is the final anticipated amendment in a… Read More

Following Suit – FDIC Finalizes Rule Reaffirming “Valid When Made” Doctrine for State Banks

Posted in Regulatory Developments

On June 25, 2020, following the OCC’s lead, the Federal Deposit Insurance Corporation’s (FDIC) board of directors voted 3-1 to finalize a rule that reaffirms the “valid when made” doctrine as applicable to loans originated by state-chartered banks and insured branches of foreign banks. The FDIC believes that reaffirmation of a state bank’s ability to… Read More

Consumer Financial Pilot Advisory Opinion Program Takes Flight

Posted in CFPB, Regulatory Developments

The Consumer Financial Protection Bureau recently announced the launch of a pilot advisory opinion (AO) program and also proposed a permanent AO program, which will replace the Pilot AO Program after the proposed permanent AO program is finalized. Both programs are intended to provide guidance to address uncertainty regarding the Bureau’s existing regulations, and are part of… Read More