CSBS Rolls Out Joint Examination Initiative for Nationwide Payments Firms

By Jeremy McLaughlin and Dan S. Cohen

On September 17, the Conference of State Bank Supervisors (CSBS) announced that at least 40 states will establish a joint examination process for “nationwide payments firms” for the 2021 examination cycle. Known as “MSB Networked Supervision,” the initiative will allow 78 licensed payments companies, including some cryptocurrency exchanges, to undergo one joint examination rather than separate examinations for each state in which they are licensed. The examinations will be conducted by a group of examiners from multiple states but led by one designated state’s regulator. To be eligible, companies must be licensed in at least 40 states. This initiative follows the “One Company, One Exam Pilot” that was completed earlier this year and is part of CSBS Vision 2020, an initiative to create “a networked system of nonbank licensing and supervision.”

The new initiative is an important development for money services businesses that operate in at least 40 states. Such firms will no longer be subject to 40 or more (in most cases) individual examinations by different examiners assessing their operations for compliance with different standards. A single, uniform examination process will likely reduce compliance costs and business interruptions while providing more regulatory certainty. This initiative could also help blunt industry demand for the embattled “payments charter” proposal offered by the Office of the Comptroller of the Currency. One advantage of that charter would be a more streamlined examination process, which the MSB Networked Supervision initiative now offers.

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