Category: Payment Systems

1
Cryptocurrency 2018: When The Law Catches Up With Game-Changing Technology
2
The Screen Scrape Debate will not Abate
3
Regulation CC Amendments Reallocate Risks of Remote Deposit
4
FDIC Economic Inclusion Summit A Good Reminder of Fair and Responsible Banking Practices
5
Financial Inclusion and Robust Regulation Are on the Table as OCC Pushes Ahead With Fintech Charter
6
New Special Purpose National Bank Charter for FinTech Companies
7
OCC Explores Special Purpose National Bank Charter for Fintech Companies
8
The Post-Election FinTech World: Are Happy Days (for Bankers) Here Again?
9
Bankruptcy Payment Change Notice Rule Changes to Take Effect December 1, 2016
10
The future of Fintech event, San Francisco, 1 November

Cryptocurrency 2018: When The Law Catches Up With Game-Changing Technology

By: David E. Fialkow, Edward J. Mikolinski, Jack S. Brodsky                     

Blockchain technology and the virtual currency, or cryptocurrency, that uses this technology are revolutionizing the way businesses function and deliver goods and services. Even as cryptocurrency becomes a widely debated topic, gaining the critical attention of regulators and policymakers, individuals and businesses are investing billions of dollars in cryptocurrency annually.

To understand how blockchain and cryptocurrency may impact you, your business, and your industry, it is important to understand what cryptocurrency is and how the underlying blockchain works. This article provides a brief introduction to these concepts as well as a primer on cryptocurrency legal issues.

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The Screen Scrape Debate will not Abate

By Judith E. Rinearson, Rizwan Qayyum

The debate surrounding “screen-scraping” continues as Member States of the European Union are preparing for the impending Second Payment Services Directive (“PSD2”). Screen scraping is the practice in which third-party Payment Initiation Service Providers (“PISPs”) and Account Information Service Providers (“AISPs”) are granted access to bank accounts of a client utilising their credentials to perform a service. As heralded in our discussion in July identifying the problem, the European Banking Authority (“EBA”) maintained their stance of outlawing the practice in the final draft Regulatory Technical Standards (“RTS”) on secure communication and Strong Customer Authentication (“SCA”). Consistent industry pressure has led the European Commission (“EC”) to request of the EBA to permit AISPs and PISPs to utilise screen scraping as a “fallback option”.

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Regulation CC Amendments Reallocate Risks of Remote Deposit

By: John ReVeal

More than three years after proposing amendments to Regulation CC to add new indemnities for remotely deposited checks, new warranties for electronic checks and electronic returned checks, and new indemnities for electronically created items, the Federal Reserve has at last issued final rules. These new rules also modify the expeditious return rules, including by making electronic returned checks subject to those requirements. The final rules were issued on May 31, 2017, and will take effect on July 1, 2018.

To read the full alert, click here.

FDIC Economic Inclusion Summit A Good Reminder of Fair and Responsible Banking Practices

By Soyong Cho

Yesterday, the FDIC hosted a day-long Economic Inclusion Summit that brought together stakeholders in private industry, the government, and non-profit organizations to discuss strategies to expand credit to under-served communities. Speakers stressed the need to understand the personal and financial challenges facing low- and moderate-income (“LMI”) populations in order to more effectively design products and marketing channels to reach LMI communities. Leveraging big data and technology were identified as key factors to reducing costs and profitably serving LMI customers.

Banks are of course rated on their outreach initiatives to under-served communities under the Community Reinvestment Act (“CRA”), but profitably expanding their customer base is also good business. The FDIC’s Summit serves as a reminder of the established programs, partnerships, and networks that exist to assist banks to meet their CRA obligations. However, it is also a good reminder that banks must be sensitive to the regulatory compliance and other risks attendant with marketing to and servicing LMI communities in particular, as even the best intentions can be undermined by flawed implementation or unclear regulatory guidance. Among others, UDAAP, fair lending, and privacy issues should be considered in all phases of product development and delivery. In the coming months, K&L Gates will be hosting a series of webinars focused on the nuts and bolts of consumer protection compliance.

Financial Inclusion and Robust Regulation Are on the Table as OCC Pushes Ahead With Fintech Charter

By Anthony Nolan, Judith Rinearson, Jeremy McLaughlin, and Eric Love

Last week the United States Office of the Comptroller of the Currency (“OCC”) issued a Draft Supplement to its Licensing Manual (“Supplement”) in furtherance of its proposal to rolling out a special purpose national bank (“SPNB”) charter for financial technology (“fintech”) companies. The Supplement outlines the process by which a fintech company may apply for a SPNB charter, and the considerations the OCC will take into account when evaluating such applications. A link to the Supplement appears here.

The Supplement reiterates OCC determination that the SPNB charter would be “in the public interest” because it would provide “uniform standards and supervision,” “support[] the dual banking system,” promote “growth, modernization, and competition” in the financial system, and encourage fintech companies to “promote financial inclusion.” It also makes clear the OCC’s determination to promote financial inclusion and to rebut criticisms that the SPNB charter would represent a light touch regulatory regime.

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New Special Purpose National Bank Charter for FinTech Companies

New York partners Anthony Nolan and Judith Rinearson will be speaking in a Strafford live webinar on “New Special Purpose National Bank Charter for FinTech Companies: Evaluating the Benefits and Regulatory Pitfalls on Thursday, March 16 2017 at 1:00pm-2:30pm EDT. This will focus on a recent proposal by the United States Office of the Comptroller of the Currency (OCC) to consider granting special purpose national bank charters to FinTech companies that are engaged in fiduciary activities or in activities that include receiving deposits, paying checks, or lending money. The special purpose charter offers the benefits of federal preemption and some state licensing requirements. However, there are regulatory and supervisory burdens that must be carefully considered such as activity limitations, BSA/AML requirements and minimum capital and liquidity requirements.

The panel will provide an overview of the OCC’s proposal for special purpose national bank charters for FinTech companies and the potential regulatory pitfalls that FinTech companies must consider. The program will address the OCC’s chartering process and the supervisory, financial and operational conditions that would apply. It will review these and other key issues:

  • Benefits of special purpose national bank charters for FinTech companies;
  • Regulatory pitfalls of special purpose national bank charters for FinTech companies;
  • The OCC’s chartering process and the supervisory, financial and operational conditions that would apply;
  • Positions of other relevant US bank regulatory agencies;
  • Implications for the future development of the Fintech industry in the United States.

For more information or to register click here.

OCC Explores Special Purpose National Bank Charter for Fintech Companies

By Judith E. RinearsonAnthony R.G. NolanRebecca H. Laird and Jeremy M. McLaughlin

On December 2, 2016, the Office of the Comptroller of the Currency (“OCC”) announced its plans to move forward with a proposal to consider applications from financial technology (“fintech”) companies to receive charters as special purpose national banks. The OCC simultaneously released a white paper detailing the program. The OCC is seeking comments on its proposal, including responses to 13 specific questions listed in the paper. The announcement is potentially significant for the fintech sector, but questions remain as to whether a special bank charter would represent a fundamental change or merely an incremental enhancement. The comment period ends on January 15, 2017.

To read the full alert, click here.

Bankruptcy Payment Change Notice Rule Changes to Take Effect December 1, 2016

By Phoebe S. Winder and Ryan M. Tosi

On December 1, 2016, the amendments to Bankruptcy Rule 3002.1 aimed at clarifying when a secured creditor must file a payment change notice (“PCN”) in a Chapter 13 bankruptcy take effect. The new rule requires secured creditors to file PCNs on all claims secured by the Chapter 13 debtor’s primary residence for which the debtor or Chapter 13 Trustee is making post-petition payments during the bankruptcy, without regard to whether the debtor is curing a pre-petition arrearage. The new rule also clarifies that the PCN requirement ceases once the creditor obtains relief from stay, unless the court orders otherwise.

Our prior alerts and articles detailing the amendments can be viewed at:

Take Notice of This Change: Supreme Court Adopts Recommended Amendments to Bankruptcy Notice of Payment Change Rule

Advisory Rules Committee Adopts Amendments to Bankruptcy Rule 3002.1

Have You Noticed Your Payment Change? Advisory Rules Committee Proposes Amendments to Bankruptcy Rule 3002.1

 

The future of Fintech event, San Francisco, 1 November

K&L Gates will be co-hosting an event with the Silicon Vikings in San Francisco on Tuesday November 1st. This will be a panel session with presenting companies including: Checkbook, bitwage, StratiFi and Qwil. An event not to be missed.

The panel will include:

  • Sanjiv Das, Professor of Finance, Santa Clara University
  • Jacob Sisk, VP Payments & Data Science, CapitalOne
  • Tyler He, Business Development, Tencent
  • Moderator & Event Chair: Shikhar Das, Assistera

Details of the event:

  • Date/time: Tuesday, November 1st, 6.00 pm – 8.30 pm
  • Location: K&L Gates, 4 Embarcadero Center, Suite 1200, San Francisco, CA 94103 (google maps)
  • Register: Click here for more details or to register to attend

For any queries, please contact K&L Gates partner, Lars Johansson.

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