CFPB Proposes New Rules for Prepaid Products

On November 13th, the Consumer Financial Protection Bureau (“CFPB”) published for comment new federal consumer protections for the prepaid market. The proposal would require prepaid companies to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, provide easy and free access to account information, and adhere to credit card protections if a credit product is offered in connection with a prepaid account. The CFPB is also proposing new “Know Before You Owe” prepaid disclosures that would provide consumers with clear information about the costs and risks of prepaid products upfront. Comments should be submitted within 90 days after publication in the Federal Register, which is expected shortly. CFPB Press Release.

FinCEN Advisory

On November 12th, the Financial Crimes Enforcement Network (“FinCEN”) advised of the October 24, 2014 update made by the Financial Action Task Force to its list of jurisdictions with strategic AML/CFT deficiencies.FinCEN Advisory.

Treasury Department Official Discusses AML Initiatives

On November 10th, U.S. Treasury Undersecretary David Cohen discussed recent anti-money laundering (“AML”) initiatives. He would like legislative clarification of the existing statutory safe harbor from civil liability for filing a suspicious activity report (“SAR”). He advocated that the Bank Secrecy Act should also be amended to clarify that financial institutions and their officers may enjoy the protection of the SAR safe harbor without having to demonstrate that a SAR was filed in good faith. In addition, he proposed that the USA PATRIOT Act should similarly be amended to provide financial institutions with greater comfort to share information with one another on illicit activity. FinCEN, in consultation with the SEC, is working to define SEC-registered investment advisers as financial institutions and to extend AML program and suspicious activity reporting requirements to them. Primary AML regulatory requirements would also be extended to Commodity Futures Trading Commission (“CFTC”)-registered Retail Foreign Exchange Dealers and Commodity Pool Operators. Cohen Remarks. See also Reuters.

FINCEN Statement on Money Services Businesses

On November 10th, FinCEN issued a statement concerning the provision of banking services to money services businesses (“MSBs”). FinCEN believes that banking organizations can serve the MSB industry while meeting their Bank Secrecy Act obligations. FinCEN is concerned that banks are indiscriminately terminating the accounts of all MSBs, or refusing to open accounts for any MSBs. Such a wholesale approach runs counter to the expectation that financial institutions can and should assess the risks of customers on a case-by-case basis.FinCEN Statement.