The Office of the Comptroller of the Currency will move forward with its plan to begin issuing special purpose national bank charters to fintech firms that provide services similar to traditional banks, Comptroller Thomas Curry announced in remarks at the Georgetown University Law Center.
An August white paper from Financial Innovation Now noted that fintech firms that offer banking services face a patchwork of regulations for each state that they operate in. Many partner with traditional banks in order to avoid that patchwork. Issuing special purpose national bank charters to fintech firms that engage in fiduciary activities or that receive deposits, pay checks or lend money would allow them to operate nationwide without affiliating with another institution, according to the OCC.
Special purpose charters are already in use by some financial institutions, primarily trust and credit card banks, according to the OCC. Operating under such a charter means fintech firms would be subject to the corporate organization and structure provisions of the National Bank Act.
Importantly, the OCC wrote in a white paper published in December that it sees the National Bank Act as “sufficiently adaptable to permit national banks – full-service or special purpose – to engage in new activities as part of the business of banking or to engage in traditional activities in new ways.” The agency would consider those new activities on a case-by-case basis.
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Fintech firms approved for a special purpose national bank charter would also be subject to the Bank Secrecy Act, anti-money laundering laws and economic sanctions issued by the Treasury Department’s Office of Foreign Assets Control. They would also generally be subject to prohibitions against deceptive, abusive or unfair practices under the Federal Trade Commission Act and the Dodd-Frank Act.
State laws regarding anti-discrimination, fair lending, debt collection, taxation, zoning, criminal laws, and torts would still generally apply to fintech firms with a special purpose bank charter.
The OCC is working on a formal policy for evaluating fintech firms’ applications for the charters, and is currently accepting public comments on the December white paper, which can be found here. The comment period ends Jan. 15, 2017; comments should be sent to [email protected].