On Feb. 19, the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency (collectively, the “Agencies”) announced an extension of the public comment period on the Notice
Continue Reading FDIC and OCC Extend Comment Period for Proposed Changes to the Community Reinvestment Act Regulations

On Dec. 2, 2016, the Office of the Comptroller of the Currency (OCC) published a preliminary proposal to create a national bank charter for financial technology companies (fintech). The OCC’s
Continue Reading OCC Consideration of Special Purpose Fintech Charters Draws Rapid Reaction for State Banking Regulators

At the end of March, the OCC issued a whitepaper setting out the principles that it will use to guide the development of a framework to analyze innovations in the banking sector of financial technology, or “fintech” for short.  The paper defined and encouraged “responsible innovation,” and discussed both benefits and risks arising from the types of innovations that are developing in that sector. For a more detailed discussion of the paper, see our GT Alert, “Fintech—Moving Toward a Regulatory Framework, The OCC Whitepaper on Responsible Innovation.”

The OCC’s paper, however, did not address a key question facing the industry—will small fintech startup companies be subject to the same regulations and same level of scrutiny that might affect fintech offered by banks?  A recent New York Times article referred to the current regulatory environment, state, and federal rules, as a “bramble” that these fintech startups must face. Fintech startups must confront both the typical challenges of regulatory compliance, as well as questions of whether they are even required to comply.

Consider a scenario in which a startup and a bank release mobile applications with similar utility—the startup could benefit from significant competitive advantage if it were not obligated by the same compliance requirements.  Consequently some traditional banks have urged that fintech should be subject to regulations equal to those applicable to banks because that will keep all competitive parties on equal footing.


Continue Reading Nonbank Fintech: Regulatory Uncertainty as Innovation Flourishes

The Office of the Comptroller of the Currency (“OCC”) recently released new guidance on the process it uses when considering enforcement actions against banking institutions and individuals for potential non-compliance with Bank Secrecy Act (“BSA”) compliance program requirements and anti-money laundering (“AML”) rules.  At the same time, the OCC also issued a revised policy for assessing civil monetary penalties against both institutions and individuals for compliance violations. The revised policy makes clear that the OCC intends to use the threat of monetary penalties to hold individuals – compliance officers, managers, executives, directors, or any employee of a banking institution – accountable for compliance violations. Compliance with BSA/AML programs is not simply an institutional or bank-only issue; responsibility for ensuring compliance with these programs rests with Boards of Directors, management and individual compliance personnel. Additionally, compliance is not merely a regulatory concern; the recent OCC guidance also makes clear that the OCC will notify criminal law enforcement authorities (including FinCEN, the Financial Crimes Enforcement Network) of “all formal and informal enforcement actions” pursued by the regulators.

The OCC has a statutory mandate to issue a cease-and-desist order when problems or weaknesses in a bank’s compliance systems and controls rise to the level of noncompliance with BSA requirements or result in repeat or uncorrected compliance issues. In addition to a mandatory cease-and-desist order, the OCC may also pursue civil monetary penalties (“CMP”).  The OCC’s process generally allows notice and an opportunity to respond within 15 days of written notice of noncompliance to either an institution or individual. The OCC’s new guidance sets forth the process by which a bank or an individual may respond to a notice of noncompliance.


Continue Reading OCC Issues New Guidance and Policies on Enforcement Actions and Civil Monetary Penalties Against Institutions and Individuals