The Consumer Financial Protection Bureau (“CFPB”) recently issued a proposal consisting of (i) revisions to its Policy on No-Action Letters — which was finalized in February 2016 (“2016 Policy”) — designed to increase interest in applying for no-action letters (“NALs”) under the 2016 Policy; and (ii) the creation of a CFPB Product Sandbox (collectively, the “Proposal”). The Proposal was issued by the CFPB, among other reasons, to spur innovation in the fintech sector. Comments on the Proposal will be due 60 days after its publication in the Federal Register.

Under the 2016 Policy, which provides for the issuance of NALs consisting of non-binding staff-level no-action recommendations, the CFPB has issued only one such letter to date. The Proposal, which is intended to better incentivize firms — including fintech companies — to seek NALs from the CFPB, has the following overarching goals:

  • Streamlining the application process;
  • Streamlining the CFPB’s processing of applications;
  • Expanding the types of statutory and regulatory relief available;
  • Specifying procedures for an extension where the relief initially provided is of limited duration; and
  • Providing for coordination with existing or future programs offered by other regulators designed to facilitate innovation.

The Proposal was filed on Dec. 10, 2018 and signed by Mick Mulvaney on the last day of his tenure as acting director of the CFPB. Kathy Kraninger, who was sworn in as the director of the CFPB later that same day, has not publicly opined on her position on the Proposal.

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On Oct. 3, 2018, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (collectively, the “Agencies”) issued an interagency statement regarding the sharing of Bank Secrecy Act (“BSA”) resources (“Interagency Statement”). The Interagency Statement is directed at banks, and does not extend to other financial institutions subject to the BSA, such as money services businesses or broker-dealers. For purposes of the Interagency Statement, the term “bank” includes each agent, agency branch or office within the United States of any bank, savings association, credit union or foreign bank (each, a “Bank”).

The Agencies clarified that Banks, particularly those with “a community focus, less complex operations, and lower-risk profiles for money laundering or terrorist financing,” may decide to enter into collaborative arrangements to share resources to manage their BSA and anti-money laundering obligations more efficiently and effectively — although, each Bank that enters into a collaborative arrangement remains individually responsible for ensuring compliance with its obligations under the BSA. Any collaborative arrangement entered into by a Bank must be designed and implemented in accordance with the Bank’s risk profile for money laundering and terrorist financing, subject to oversight by the Bank’s board of directors and periodic evaluation, appropriately documented and supported by a contractual agreement between the participating Banks that sets forth each institution’s rights, responsibilities and procedures for protecting customer data and confidential information.

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On July 31, 2018, the Office of the Comptroller of the Currency (“OCC”) issued a news release announcing that it will begin accepting special purpose national bank (“SPNB”) charter applications from fintech companies that do not take deposits but are engaged in the business of lending money or paying checks (including the modern equivalent thereof, which the OCC suggests includes issuing debit cards or otherwise facilitating payments electronically). The OCC’s decision was announced shortly after the U.S. Department of the Treasury released an extensive report endorsing SPNB charters for fintech companies. As part of its announcement, the OCC also published a Policy Statement on Financial Technology Companies’ Eligibility to Apply for National Bank Charters as well as a supplement to the Comptroller’s Licensing Manual.

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