Header graphic for print

MoFo Reenforcement

The Enforcement Blog

Are You a Money Transmitter in South Dakota or Delaware?

Posted in Uncategorized

One of the defining aspects of the payments revolution of the past few years—at least from a regulatory perspective — has been the question of whether a particular payments service is subject to regulation as money transmission. A recent trend has been toward states affirming that, under certain conditions, state money transmission licensing laws do not apply to services provided as an agent of the payee. The most recent state to do so is South Dakota.

Read our client alert.

FDIC Publishes Brokered Deposits Proposed Rule

Posted in Regulatory Developments

On February 10, 2020, the Federal Deposit Insurance Corporation (FDIC) published a proposed rule intended to modernize the regulatory treatment of brokered deposits (Proposed Rule). The Proposed Rule would amend 12 C.F.R. parts 303 and 337 to set forth the regulatory scheme for determining whether deposits placed through deposit placement arrangements are classified as brokered deposits. The Proposed Rule follows a February 2019 FDIC advance notice of Proposed Rulemaking on this issue.

Read our client alert.

Agencies Propose Amendments to Volcker Rule Covered Fund Provisions

Posted in Regulatory Developments

On January 30, 2020, five federal agencies proposed amendments to the Volcker Rule related to the prohibition on investing, sponsoring, and having certain relationships with covered funds (the “Proposed Funds Rule”). The Proposed Funds Rule comes on the heels of the conclusion of a separate rulemaking process dealing primarily with the Volcker Rule’s proprietary trading and compliance program requirements. Comments on the Proposed Funds Rule are due by April 1, 2020.

Read our client alert.

CFPB Takes a Step Away from “You Know It When You See It” Standard for UDAAP Abusiveness

Posted in CFPB, Regulatory Developments, UDAAP

On February 6, 2020, the Consumer Financial Protection Bureau published a Statement of Policy Regarding Prohibition on Abusive Acts or Practices to “convey and foster greater certainty” regarding how it will apply the “abusiveness” standard in exercising its sweeping UDAAP authority under the Dodd-Frank Act. This is a welcome move by the Bureau, which previously had declined to provide rules or guidance to describe, let alone define, acts or practices deemed to be “abusive.” Instead, the Bureau required regulated entities to “read the tea leaves” based on allegations in enforcement actions and statements in its Examination Manual.

Read our client alert.

Attorneys General Push Against OCC’s Attempts to Codify “Valid When Made” Rule

Posted in Credit Cards, Regulatory Developments
On January 21, 2020, twenty-two State Attorneys General and the Hawaii Office of Consumer Protection submitted a comment letter to the Office of the Comptroller of the Currency in opposition to its proposed rulemaking to resolve the “confusion” stemming from the Second Circuit’s 2015 decision in Madden v. Midland Funding LLC.

Read our client alert.

California Regulator Reiterates that Credit Sales Cannot be Used to Evade Financing Law

Posted in Regulatory Developments

In two recent actions, the California Department of Business Oversight (DBO) addressed whether companies that purchase retail installment contracts should be considered bona fide purchasers of credit sales or whether those transactions should be considered loans subject to the California Financing Law (CFL). In doing so, the DBO reiterates existing case law and sets forth the factors that the DBO will consider when determining whether a purchase of a retail installment contract should be recharacterized as a loan.

Read our client alert.

Are You a Money Transmitter in Massachusetts? In Rhode Island?

Posted in Regulatory Developments

As we enter 2020, the payments and money transmission regulatory landscape continues to evolve on a state-by-state basis.  Newly adopted regulations in Massachusetts affirm that “agent of a payee” transactions meeting certain criteria, as well as funds transfer services provided to business customers, are not subject to regulation under the state’s money transmission law. Additionally, Rhode Island’s updated money transmission licensing law took effect on January 1st. While it does not provide for an express agent of a payee exemption, it excludes funds transfer services provided to business customers.

Read our client alert.

The DBO Notifies CFL Lenders of New Rate and Other Limitations Imposed by AB 539

Posted in Regulatory Developments

The California Department of Business Oversight (DBO) has issued a Release that summarizes the provisions of California Assembly Bill 539 and addresses some implementation issues. This bill was chaptered as Chapter 708 of the 2019 Statutes and is effective January 1, 2020. Our earlier Client Alert discussed the new law in detail.

Read our client alert.

Federal Regulators Issue Joint Guidance on Banking Hemp-Related Businesses

Posted in Regulatory Developments

According to new guidance released on December 3, 2019, banks are not required to file suspicious activity reports on customers solely because they are engaged in the legal growth or cultivation of hemp. The guidance was issued by the federal banking agencies and the Financial Crimes Enforcement Network in consultation with the Conference of State Bank Supervisors. We discuss the key takeaways from the new guidance and how it impacts banks and their customers.

Read our client alert.

Long Awaited HVCRE Rule Clarifies Capital Treatment of Certain Real Estate Loans

Posted in Regulatory Developments

On November 19, 2019, the federal banking agencies issued a final rule that incorporates a new definition of an “HVCRE exposure” into the U.S. regulatory capital rules. The new definition is substantially that of an “HVCRE ADC loan” from Section 214 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, enacted into law on May 24, 2018. The final rule is scheduled to go into effect on April 1, 2020.

Read our client alert.