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On June 22, 2022, the Financial Crimes Enforcement Network (FinCEN) issued a Statement on Bank Secrecy Act Due Diligence for independent ATM owners and operators.  The purpose of the statement is to “provide clarity to banks on how to apply a risk-based approach to conducting customer due diligence (CDD) on independent Automated Teller Machine (ATM) owners or operators, consistent with the requirements set out in FinCEN’s 2016 CDD Rule.”

Under FinCEN’s 2016 CDD Rule, banks are required to establish and maintain written policies and procedures reasonably designed to identify and verify “beneficial owners of legal entity customers.”   This Rule extends to conducting CDD on independent ATM owners and operators who maintain bank accounts to supply cash for their ATMs and to settle the electronic funds transfers used to process ATM transactions.…

Continue Reading FinCEN Issues Statement on BSA Due Diligence for Independent ATM Owners and Operators

On June 3, 2022, the Financial Crimes Enforcement Network (FinCen) issued an Advance Notice of Proposed Rulemaking  proposing public comment on the enactment of a no-action letter process.  This Advanced Notice follows FinCen’s Report to Congress submitted in June 2021 that was based on FinCen’s consultation with the Attorney General, State bank supervisors, State credit union supervisors, and other Federal agencies and regulators.  In its report, FinCen evaluated the difficulties it faces because of the overlap between its enforcement authority and other regulators.  FinCen also examined the benefits and concerns on how a no-action letter process could affect illicit finance risks.  FinCen stated that the primary benefits of a no-action letter process “are that it could promote a robust and productive dialogue with the public, spur innovation among financial institutions, and enhance the culture of compliance and transparency in the application and enforcement of BSA.”  Ultimately, FinCen concluded that it should establish a rulemaking to create a no-action letter process.
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Continue Reading FinCEN Proposes No-Action Letter Process

Fintech lender Opportunity Financial (“OppFi”) and the Department of Financial Protection and Innovation (“DFPI”), California’s financial-services regulator, filed dueling claims as they battle over state efforts to enjoin the company’s branded loans, which exceed California’s 36% interest-rate cap. This is the latest effort by fintech lenders to cement the True Lender Rule against state opposition.
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Continue Reading Opportunity Financial’s Lawsuit Against California’s Financial-Services Regulator Signals Continued Fight Over “True Lender” Principles

Blockchain regulation continues to be the topic du jour, with increasing scrutiny from government agencies across the board. The latest comes from the New York State Department of Financial Services (DFS), which has been a leader in the space since the 2015 “BitLicense” framework under the New York Financial Services Law. On April 28, 2022, new DFS Superintendent Adrienne A. Harris issued fresh guidance encouraging cryptocurrency companies to adopt blockchain analytics tools as a best practice.
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Continue Reading New York State Department of Financial Services Takes Aim at Blockchain Entities Circumventing Sanctions on Russia

Jeff Ehrlich

McGuireWoods is pleased to announce that Jeff Ehrlich, former deputy enforcement director at the Consumer Financial Protection Bureau, has joined the firm’s financial services litigation practice as a partner in Washington, D.C.

Jeff joined the CFPB in 2011 and was promoted to deputy enforcement director in 2013. In that role, he led the CFPB’s…

On July 12, 2021, the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) proposed interagency guidance on how banks should manage third-party relationships, including partnerships with fintech companies. The proposal would offer a framework for banks when developing risk management practices for their third-party relationships, taking into account the level of risk, complexity, size of the organization, and the nature of the third-party relationship.
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Continue Reading Bank Regulators Propose Interagency Guidance on Fintech Partnerships

After years of litigation, the Office of Comptroller of the Currency’s (“OCC”) special purpose national bank charter (“fintech charter”) survives to see another day.  On June 3, 2021, the Second Circuit reversed the district court’s decision denying the OCC’s motion to dismiss, delivering a blow to the New York Department of Financial Services (“DFS”) and paving the way for the OCC to again accept applications for its fintech charter.
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Continue Reading OCC’s Fintech Charter Survives After Reversal in the Second Circuit

On March 9, 2021, the Second Circuit heard oral arguments in connection with the New York Department of Financial Services’ (“DFS”) challenge to block the Office of Comptroller of the Currency’s (“OCC”) special purpose national bank charter (“fintech charter”). The lawsuit was filed in the Southern District of New York in September of 2018, shortly after the OCC made available its special purpose bank charter.

The fintech charter would allow certain non-depository fintech companies to operate as “special purpose national banks” under the National Bank Act (“NBA”), which is overseen by the OCC without the burden of state-by-state regulation and licensing. The OCC views deposit-taking as just one of the activities undertaken by banks in the “business of banking” under the NBA. However, critics, including the DFS, argue deposit-taking is essential to the “business of banking,” which should preclude non-depository fintech companies from obtaining national bank protections.…

Continue Reading Oral Arguments Held in Challenge to OCC’s Fintech Charter

Last week, we reported that on December 30, 2020, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) issued compliance assistance sandbox (“CAS”) approval to Payactiv, Inc. (“Payactiv”) regarding specific aspects of its earned wage access (“EWA”) product.

Payactiv’s Chief Legal Officer, David Reidy, expressed Payactiv’s reaction to the Approval Order this way – “We are grateful for the hard work and commitment the Bureau showed through this whole process. Everyone involved believes in EWA as an important and innovative benefit for workers. I couldn’t be more proud that Payactiv is the first and only EWA provider to be granted this approval.”…

Continue Reading A Detailed Look At The CFPB’s Historic Approval of Payactiv’s Earned Wage Access (EWA) Program under Regulatory Sandbox Policy

New York, California and six other States filed a widely expected lawsuit on January 5 seeking to invalidate the “True Lender” Rule recently issued by the Office of the Comptroller of the Currency (“OCC”).  As we previously reported, the OCC’s True Lender Rule — finalized in October and effective since December 29 —provides bright-line tests for determining, in the context of a lending partnership between a national bank (or federal thrift) and a third-party (often a FinTech or other non-bank firm), which entity actually “made” the loan, i.e., which entity was the “true lender.”
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Continue Reading States Sue to Set Aside OCC’s True Lender Rule