On June 24, 2021, the U.S. House of Representatives passed a resolution to overturn the Office of the Comptroller of the Currency’s (“OCC”) “true lender” regulation that had been finalized on October 30, 2020. This resolution revives the uncertainty regarding the enforceability of loan terms when a national bank or federal savings association assigns loans to third parties. President Biden is expected to sign the resolution.Read More
The Federal Deposit Insurance Corporation (FDIC) has issued a “Request for Information and Comment on Digital Assets” (RFI) to learn more about the “novel and unique considerations related to digital assets….[g]iven that banks are increasingly exploring the emerging digital asset ecosystem.” A key theme of the RFI is the development of a framework to promote “responsible innovation.” Comments are due by July 16, 2021.Read More
In September 2019, the U.S. House of Representatives passed the “Secure and Fair Enforcement (SAFE) Banking Act of 2019”, the first stand-alone cannabis legislation to be approved by the House of Representatives. Earlier this month, revised versions of the bill were introduced in the House and Senate “to reform federal cannabis laws and reduce the public safety risk in communities across the country.”Read More
By: Judie Rinearson
While global investment in fintechs has slowed, interest in fintech investments from the banking sector has actually increased. What’s particularly intriguing is that this is not coming just from the big banks (who have been involved in the fintech sector for years) but frequently many smaller banks are starting to recognize the opportunity presented by investing in the fintechs — especially those fintechs that the banks already work with. Boston partners, Stan Ragalevsky and Rob Tammero have analyzed this development, which looks to be a true win-win for both the banks and fintechs involved. Click here to read more.
Late last month, several of the world’s largest banks invested $50 million in a digital cash settlement project with the aim of developing a more efficient clearing and settlement system. The new technology, referred to as the ‘utility settlement coin’ (USC), has been a work in progress since 2015, after Swiss bank UBS Group and London-based technology startup Clearmatics announced to the market that they had commenced working on the project.Read More
As part of its release of the ‘Consumer Data Right Rules Framework’ (Framework), the Australian Competition and Consumer Commission (ACCC) has outlined its accreditation process for entities seeking to become accredited data recipients under the Open Banking Regime.
While Authorised Deposit-taking Institutions (ADIs) will have access to a streamlined accreditation process, all other applicants will need to meet criteria such as:
- whether they satisfy a ‘fit and proper’ person test;
- the appropriateness and proportionality of the applicant’s systems, resources and procedures;
- the adequacy of the applicant’s internal and external dispute resolution processes; and
- whether the applicant holds appropriate insurance.
On 13 January 2018 the second Payment Services Directive (PSD2) became law across the European Union, leading to Open Banking. For background information, please see EU oversight on payments and Open Banking.
Mastercard announced on 5 June that it is launching a suite of services to help banks and FinTech companies navigate the Open Banking environment. The programme seeks to address the liability issues of banks sharing their data with third parties and to help startups to better communicate with their banking partners. For banks, Mastercard is building a pan-European directory of verified and legitimate third party providers, backed by a fraud monitoring service and dispute resolution mechanism. Startups in turn will be provided with a ‘connectivity hub’ that will help third parties establish and maintain communication with banks.
The new services will be launched first during a pilot phase in early 2019, with the UK and Poland being a particular priority, before being rolled out across Europe later that year.
By Jim Bulling and Edwin Tan
The Australian Government has today released a report into Open Banking in Australia that sets out recommendations in relation to the method of implementation and proposed timelines. Some key points are:
- the Australian Competition and Consumer Commission (ACCC) should be primarily responsible for overseeing standards-setting and accreditation, assisted by the Office of the Australian Information Commissioner for privacy issues;
- the obligation to share data should apply to all Australian Deposit-taking Institutions (ADIs) as well as reciprocally for other participating entities;
- all ADIs should be automatically accredited to receive data. A risk-based accreditation standard should be used for non-ADIs (this would include most FinTech startups, for example);
- the use of Application Programming Interfaces to facilitate data sharing; and
- mandatory implementation of “read-only” access should be approximately 12 months from a final Government decision to implement Open Banking for the big 4 banks, with a further 12 months transitory period for other banks.
Has the age of the digital bank arrived in the UK? Following the authorisation of Atom Bank last year, 3 additional digital banks have been issued with banking licences by the UK Prudential Regulation Authority (PRA) since May 2016.
These new licensees are the result of the PRA’s focus in recent years on lowering the barriers to entry for new banks and promote competition in the UK. As part of this focus, in 2013, PRA lowered the initial minimum capital requirements for Small Specialist Bank applicants to €1 million or £1 million (whichever is higher), plus a capital planning buffer (CPB). PRA and the Financial Conduct Authority (FCA) also launched a New Bank Start-up Unit in January 2016 to assist applicants with the authorisation process. Read More
By Jacob Ghanty
The second EU Payment Services Directive is set to change the banking landscape in Europe. In the linked article, Jacob Ghanty describes some of the changes that PSD2 will bring about. This article was first published in inCOMPLIANCE, member publication of the International Compliance Association www.int-comp.org.