#2022-24, August 19, 2022

FDIC Issues Representment Guidance

The FDIC released guidance this week regarding the issue of representment, or the practice of charging multiple non-sufficient funds fees for transactions presented multiple times against insufficient funds in a customer’s account.  The guidance, which is similar to the recommendations in an article in the agency’s Supervisory Insights publication, applies only to FDIC-regulated institutions.

According to the FDIC, banks are encouraged to pursue a range of “risk-mitigating activities” regarding NSF fees, including eliminating the fees; declining to charge more than one NSF fee for the same transaction, regardless of whether the item is re-presented; conducting a comprehensive review of policies and practices related to re-presentments; and clearly communicating to customers the amount of fees and when those fees will be imposed.  The agency noted that if institutions self-identify re-presentment NSF fee issues, they are expected provide restitution to affected customers and “promptly” correct NSF fee disclosures and account agreements.

The guidance also recognizes an institution’s proactive efforts to self-identify and correct violations, noting that, “Examiners will generally not cite (unfair or deceptive acts or practices) violations that have been self-identified and fully corrected prior to the start of a consumer compliance examination.”  In instances where institutions have been unable to access accurate ACH data for re-presented transactions beyond two years, the FDIC will accept a two-year look-back period for restitution.

To read more, click here.

Fed Issues Guidance on Crypto for Banks

Earlier this week, the Federal Reserve said that Fed-supervised banks seeking to engage in activities related to cryptocurrency and other digital assets must first assess whether such activities are legally permissible and determine whether any regulatory filings are required. The supervisory letter also notes that banks should notify the Fed prior to engaging in crypto-asset-related activities.

The letter is similar to guidance previously issued by the OCC and FDIC and requires banks to notify regulators before engaging in any digital asset activity, including custody activities.  The three agencies released a joint statement late last year in which they pledged to provide greater guidance on the issue.  The Fed noted that the crypto-asset sector presents opportunities for banks but comes with many potential hazards, including cybersecurity risks and financial stability risks.  Banks already engaged in crypto activities should contact the Fed “promptly” if they have not already done so.

To read more, click here.

Final Payments System Access Guidelines Issued by Fed

The Fed this week also announced final guidelines it will use to evaluate requests for master accounts or access to the central bank’s financial services.  The guidelines are substantially similar to those first proposed by the Fed in 2021, which came after requests from fintech firms and entities with novel bank charters to gain access to the payments system.

The guidelines include a tiered review framework to provide additional clarity on the level of scrutiny that Reserve Banks will apply to different types of institutions with varying degrees of risk.  Institutions with federal deposit insurance would be subject to a more streamlined level of review, while institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review.

To read more, click here.