In this episode of Payments Pros, Carlin McCrory is joined by Nick St. John, director of regulatory compliance at America's Credit Unions, to discuss the Corporate Transparency Act (CTA) and related developments from the Financial Crimes Enforcement Network (FinCEN). Enacted in 2021, the CTA aims to combat the use of anonymous legal entities for money laundering. It mandates that legal entities report their beneficial ownership information to FinCEN, which maintains a database accessible to law enforcement, financial institutions, and other entities that meet specific criteria.

Nick explains that the CTA applies to corporations and similar entities, with exceptions like banks and credit unions. Entities must report information about the company and its beneficial owners, defined as any person with a 25% or more ownership interest or who exercises substantial control. Reporting deadlines vary based on the company's creation date.

He also clarifies the difference between beneficial ownership reporting to financial institutions and the new reporting to FinCEN. Under the CTA, there is no numerical limit to the number of control persons that must be reported. Financial institutions can request this information for customer due diligence compliance requirements. Carlin and Nick conclude by discussing future developments from FinCEN, including when the information will be made available to financial institutions and changes to existing rules to align with the CTA.

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In this special crossover edition of Payments Pros and The Consumer Finance Podcast, Chris Willis is joined by Josh McBeain and Glen Trudel. They discuss the recent final credit card late fee rule issued by the Consumer Financial Protection Bureau (CFPB) and the industry's reaction to it. The rule lowers the safe harbor provision dollar amount for late fees to $8 for large credit card issuers and increases it for small issuers. The team also discusses the legal challenge filed against the rule by a collective of trade groups. They speculate on potential industry responses if the rule survives legal challenges, such as increasing APRs, creating new fees, raising minimum payments, and tightening credit.

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In this episode of Payments Pros, co-hosts Keith Barnett and Carlin McCrory discuss the Consumer Financial Protection Bureau's (CFPB) latest proposed rule. This rule aims to prohibit covered financial institutions from charging consumers nonsufficient funds (NSF) fees on transactions that are declined instantaneously or near instantaneously.

The CFPB believes this rule will benefit consumers who would otherwise incur NSF fees, potentially leading their accounts to drop to zero or below zero. However, it also acknowledges that financial institutions may become less willing to open depository accounts for these consumers, potentially increasing the number of unbanked and underbanked individuals.

The rule, proposed on January 24, is open for comments until March 25, and is expected to be finalized 30 days after publication in the Federal Register.

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In this special joint episode of Payments Pros and The Crypto Exchange, Ethan Ostroff, James Kim, and Carlin McCrory discuss the Consumer Financial Protection Bureau's (CFPB) proposed rule to supervise large tech companies and other providers of digital wallets and payment apps. The proposed rule asserts that digital assets are "funds" subject to the Dodd-Frank Act and other federal consumer financial laws and regulations, which would expand the CFPB's supervisory powers to examine companies facilitating crypto and other digital asset transactions.

Our group discusses the legal basis for the CFPB's assertion of jurisdiction over digital assets, and observes that the CFPB's position lacks clear statutory authority and may violate the major questions doctrine. They also note that Congress is currently working on legislation related to digital assets, and that the CFPB should not preempt this process.

Lastly, the group highlights practical questions that companies face when assessing the proposed rule, such as whether NFTs are covered and how companies can monitor anonymous, blockchain transactions.

The final rule is anticipated to be released before year end, with examinations starting in 2025.

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In the second and final installment of our two-part Payments Year in Review series, Keith Barnett, Carlin McCrory, and Josh McBeain continue their discussion around the payments landscape of 2023 and their predictions for 2024.

In this episode, our co-hosts discuss the CFPB and FTC's attempts to regulate negative options, the Federal Reserve's FedNow, the adoption of Money Transmission Modernization Act in several states, Nacha's proposed risk management framework for credit push fraud, and state legislation concerning Earned Wage Access.

More information about 2023 regulatory developments can be found in our 2023 Payments Year in Review.

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In the first installment of a two-part Payments Year in Review series, Keith Barnett, Carlin McCrory, and Josh McBeain delve into the payments landscape of 2023 and share their predictions for 2024.

Our co-hosts discuss the Consumer Financial Protection Bureau's (CFPB) proposed rule to supervise "larger participants" in the market for general-use digital consumer payment applications. They also examine the CFPB's report on complaints about payment app fraud, their statements on add-on fees and fees associated with requests for account information, as well as their efforts to reduce credit card late fees. Not to be left out of the party, they also discuss the Federal Trade Commission's (FTC) proposed new rule aimed at prohibiting "junk fees." This is a can't miss episode for anyone looking to catch up on federal payments issues in 2023.

More information about 2023 regulatory developments can be found in our 2023 Payments Year in Review.

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In this episode of Payments Pros, Keith Barnett is joined by James Stevens to discuss the Merchant Acquirer Limited Purpose Bank Charter (MALPB) in Georgia, a unique charter that allows companies to offer merchant payment processing services without a sponsoring partner bank. Despite being enacted 12 years ago, companies have been unable to utilize it due to card networks not allowing direct participation. This could change soon, especially with Fiserv's recent application.

Keith and James note that MALPB is limited to merchant activities and has specific rules regarding merchant funds. The application process is rigorous, involving a detailed review of owners, officers, and directors. The charter also requires the company to employ at least 50 Georgia residents and to engage in merchant acquiring activities within a year of receiving the charter.

The Georgia Department of Banking and Finance, which regulates traditional banks in Georgia and will regulate these MALPBs, has posted some guidance and an application form. The guidance is particularly helpful, providing robust capital requirements for these charters.

The conversation wraps up with Keith and James emphasizing that the charter's value hinges on the card networks' access allowance. Troutman Pepper, having played a key role in drafting the MALPB law and having a wealth of experience in securing bank charters, is ideally positioned to guide applicants. Our team has been involved in the establishment of all banks formed in the state of Georgia since 2010. James underscores the importance for applicants to seek advice from attorneys and consultants with a proven track record of successfully filing and obtaining bank charters in Georgia.

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In this episode of Payments Pros, Keith Barnett and Carlin McCrory are joined by Jordan Wright, CEO of Atomic Financial, to discuss the Consumer Financial Protection Bureau's (CFPB) proposed 1033 rule. This rule aims to limit the misuse or sale of consumer data, and is expected to be finalized by summer 2024.

Jordan highlights the importance of data portability in banking, comparing it the telecommunications industry's phone number portability. He suggests that the rule will increase competition, forcing banks to offer better services to retain customers.

The proposed 1033 rule requires financial institutions, starting with the largest, to make consumer data, including bill pay data, accessible to third parties and consumers. This may necessitate significant architectural changes and costs, but ensures consumers' legal right to share their data without incurring unnecessary fees.

The discussion concludes with Jordan forecasting that the proposed 1033 rule will enhance banking services by fostering competition and simplifying the process for customers to switch banks. He foresees the emergence of earned wage access products as a tool to assist individuals in better financial management. Additionally, Jordan supports the secondary use of data for personalized financial advice and advocates for the rule's extension to encompass payroll and merchant data.

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In this episode of Payments Pros, Keith Barnett and Carlin McCrory discuss the Consumer Financial Protection Bureau's (CFPB) fall supervisory highlights, focusing on "junk fees." The report covers examinations in areas of deposits, auto servicing, and remittances completed between February and August 2023. The recent report reveals that their efforts have resulted in institutions refunding more than $140 million to consumers. The report primarily focuses on deposits as an area of supervisory observations.

Keith and Carlin also note that the report discusses CFPB identifying unfair practices by financial institutions, which have been charging consumers representment nonsufficient funds (NSF) fees without providing an opportunity to prevent additional fees after the first failed attempt. According to the CFPB, some institutions have used incomplete data that failed to capture all instances of representment NSF fees charged to consumers. The CFPB is currently seeking comprehensive reporting on when consumers were charged multiple representment fees and ensuring proper reimbursement. As noted in the report, institutions are refunding more than $22 million to consumers in response to these directives. NSF fees have been a particular point of criticism for the CFPB, arguing that they are too high and are charged without providing a service to the consumer. Therefore, institutions have been urged by the CFPB to eliminate NSF fees.

The report also addresses unanticipated overdraft fees and the CFPB's findings on pandemic relief benefits. The CFPB obtained data from several institutions related to the fees assessed over the course of 2022.

Lastly, Keith and Carlin discuss that the CFPB has identified unfair practices related to auto servicers' handling of refunds and add-on products after loans terminate early. Some servicers failed to ensure consumers receive refunds, while others miscalculated refund amounts. The CFPB found that servicers engaged in unfair practices when they miscalculated add-on product refund amounts after loans terminated early.

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In this special joint episode of Payments Pros and The Consumer Finance Podcast, Carlin McCrory, Keith Barnett, James Kim, and Chris Willis discuss the Consumer Financial Protection Bureau's (CFPB) proposed larger participant rule for consumer payments providers.

The rule is designed to supervise general use digital consumer payment applications, defining a market for these applications and subjecting participants to CFPB supervision and examination under the Consumer Financial Protection Act. Proposed on November 7, the rule targets nonbanks that provide general use digital consumer payment applications with an annual volume of at least five million consumer payment transactions. The CFPB plans to aggregate transactions among affiliated companies, and any nonbank covered person will be considered a larger participant for two years from the first day of the tax year in which they last met the larger participant test.

The group also discusses the implications of the rule, including the potential for increased enforcement activity and the broad scope of the rule. The rule is expected to be finalized and become effective around fall 2024, with examinations likely to begin in early 2025.

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