FED Announces Multiple Developments on Regulatory Front

Institutions offering novel types of financial products or with novel charters have emerged in recent years and many have requested access to accounts and payment services offered by Federal Reserve Banks. It is important that Reserve Banks evaluate all access requests with a transparent and consistent set of factors. Thus, FED has issued a supplemental notice and request for comment on updates to the proposed account access guidelines for Federal Reserve Banks to utilize in evaluating requests for access to Reserve Bank master accounts and services. Comments will be accepted for 45 days after publication in the Federal Register. 

This notice supplements proposed account access guidelines from May 2021, in which it was noted that the application of guidelines to requests by federally insured institutions should be fairly straightforward, while requests from non-federally insured institutions may require more extensive due diligence. This supplemental notice includes a new section of the proposed account access guidelines that would establish a tiered-review framework to provide additional clarity on the level of due diligence and scrutiny to be applied to requests for Reserve Bank accounts and services:

• Tier 1 would consist of eligible institutions that are federally insured.
• Tier 2 would consist of eligible institutions that are not federally insured but are subject to prudential supervision by a federal banking agency—and any holding company of which would be subject to FED oversight.
• Tier 3 would consist of eligible institutions that are not federally insured and not subject to prudential supervision by a federal banking agency at the institution or holding company level.

Related Links

• Press Release on Supplemental Notice
• Supplemental Proposed Notice (PDF)
• Press Release on M&T Bank Corporation
• Press Release on Citizens Financial Group, Inc.

Keywords: Americas, US, Banking, Guidelines, Mergers and Acquisitions, Fintech, Regtech, FED