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CFPB Proposes Strong Federal Protections for Prepaid Products

CFPB Proposes Strong Federal Protections for Prepaid Products

With its proposed rule to create better protections for users of prepaid access, the CFPB is not only flexing its regulatory muscle. It is expanding its reach to create federal uniformity in an area sporadically and unevenly controlled by state regulations. This is likely a prelude to expansion into other areas of non-bank services that equally lack uniformity from state to state. Entities that provide these services would be wise to pay close attention to the CFPB and apply effective controls. They should also anticipate greater CFPB participation in their daily activities. ————————————————————————————————————————- FOR IMMEDIATE RELEASE: November 13, 2014 CONTACT: Office of Communications Tel: (202) 435-7170 CONSUMER FINANCIAL PROTECTION BUREAU PROPOSES STRONG FEDERAL PROTECTIONS FOR PREPAID PRODUCTS  Bureau’s Proposal Includes New ‘Know Before You Owe’ Prepaid Disclosures   WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) is proposing strong, 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 Bureau 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. “Consumers are increasingly relying on prepaid products to make purchases and access funds, but they are not guaranteed the same protections or disclosures as traditional bank accounts,” said CFPB Director Richard Cordray. “Our proposal would close the loopholes in this market and ensure prepaid consumers are...
FinCEN Statement on Providing Banking Services to Money Services Businesses

FinCEN Statement on Providing Banking Services to Money Services Businesses

FinCEN believes it is important to reiterate the fact that banking organizations can serve the MSB industry while meeting their Bank Secrecy Act obligations.  Currently, there is concern that banks are indiscriminately terminating the accounts of all MSBs, or refusing to open accounts for any MSBs, thereby eliminating them as a category of customers. Please click on the link below to read the entire FinCen Statement: FInCEN Statement on MSB Bank Account Closing NOV 10...
FinCen Reaffirms its Intent to Apply Strict Controls to the Virtual Currencies

FinCen Reaffirms its Intent to Apply Strict Controls to the Virtual Currencies

In two of its most recent guidance response letters, FinCen reaffirms its intent to apply strict controls to the virtual currency world.  In these latest examples you can plainly see how they are interpreting applicability of guidance to open market startups providing significant detail to support their assertion of applicability for BSA rules.  Startups in the space will do well to assume these obligations and factor these issues into their deployment models and regulatory obligations if they are to mitigate market, regulatory, and investor risks. You can find this information in two FinCen PDFs below: FIN-2014-R011: http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R011.pdf   FIN-2014-R012: http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R012.pdf...
FinCEN order targeting LA’s fashion district may prod institutions to review trade-based money laundering defenses

FinCEN order targeting LA’s fashion district may prod institutions to review trade-based money laundering defenses

FinCEN’s GTO concerning LA’s garment district is as important for what it implies as for what it explicitly states. What it states is that a few businesses in LA’s garment district appear to have made themselves available to be used by Mexican drug cartels and money launderers. What it implies is that money laundering is not solely the concern of financial institutions. It is now a very real concern for non-financial businesses – TBML hits Main Street. The article below can be found at http://www.acfcs.org/fincen-order-targeting-las-fashion-district-may-prod-institutions-to-review-trade-based-money-laundering-defenses/ FinCEN order targeting LA’s fashion district may prod institutions to review trade-based money laundering defenses A rarely used power recently employed by the US Treasury that imposed anti-money laundering-type obligations on a wide range of businesses In Los Angeles’ Fashion District may prompt institutions to engage in a broader review of the clothing and retail sectors outside the boundaries of the order. Earlier this month, the Financial Crimes Enforcement Network (FinCEN) issued a geographic targeting order (GTO) requiring fashion-related businesses and other retailers to give greater scrutiny to cash transactions and file reports at lower thresholds. The order, which took effect October 9, will be in effect for 180 days. The order reduced the threshold at which businesses must file reports with FinCEN on cash transactions, using what is called IRS Form 8300, from $10,000 to $3,000. It includes more than 2,000 businesses, including garment and textile stores; transportation companies; travel agencies; perfume stores; electronic stores (including those that only sell cell phones); shoe stores; lingerie stores; flower/silk flower stores; beauty supply stores; and stores bearing “import” or “export” in their name. The GTO...
NY Law Panel: Bitcoin Won’t Get Banking Without Compliance

NY Law Panel: Bitcoin Won’t Get Banking Without Compliance

This article was published on October 22, 2014 @ https://www.coindesk.com/ny-law-panel-bitcoin-wont-get-banking-without-compliance/ On Tuesday morning, the New York Law School hosted the Bitcoin Law conference, drawing entrepreneurs and enthusiasts from the New York City bitcoin community, as well as many of its own aspiring lawyers. The event was moderated and largely organized by Houman Shadab, a law professor and director of the school’s Center for Business and Financial Law. Shadab has researched bitcoin and cryptocurrencies extensively, as well as hedge funds, derivatives, securitization and commercial transactions. Earlier this month he spoke to the US Commodity Futures Trading Commission on behalf of the bitcoin community. Five attorneys took the stage for a panel discussion. They were Blockchain global policy counsel and Pillsbury Winthrop Shaw Pittman counsel Marco Santori; Jerry Brito, executive director of nonprofit research and advocacy center Coin Center; Brian Koffler, president of Koffler Legal & Consulting Services; American Express VP and senior counsel Emily H Goodman Binick; and CoinComply managing director Brian Stoeckert. The discussion, titled The New Landscape for Federal and State Regulation of Cryptocurrencies, began by asking ‘Is bitcoin money?’ However, the panel found, because bitcoin is handled differently by various institutions, it may not matter. Santori said: “People like to talk about what is holding bitcoin back, and what are some of the biggest challenges today? People usually say things like ‘banking’.” He pointed out why regulation and compliance are both so critical to how banks approach bitcoin, saying: “Right now in banks and most financial institutions almost a third of their personnel are dedicated to compliance, and that tells us something: it tells us that these institutions can’t service an industry unless they’re...
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