Financial technology companies are now one step closer to having the means to apply for special purpose national bank charters.
The Office of the Comptroller of the Currency on Wednesday published a draft supplement to its licensing manual, which contains existing regulations for chartering national banks.
The draft rules, which are open for comment through April 14, give guidance on how fintech companies are expected to apply for national charters and makes it clear they are subject to all the same laws and regulations as traditional financial institutions, plus additional requirements.
“This manual reflects the approach we’ve seen from the OCC all along, and it’s clear that this is not a ‘bank-lite’ charter,” said American Bankers Association Vice President Rob Morgan in a statement Wednesday.
The OCC first revealed in December that it would give fintech firms the opportunity to apply for special purpose charters, a move that experts say would free these companies from the sometimes burdensome process of having to apply for state-by-state bank licenses.
Like traditional banks seeking charters, under Wednesday’s proposed rules, fintech firms will have to arrange a prefiling meeting with the OCC along with submitting a business proposal. But the new supplement also requires fintech firms to complete more detailed risk assessments than previously required for bank charters.
Marco Santori, partner with Cooley in New York, says the new supplement is “actually pretty encouraging for most people in the industry.” He says it is positive that the OCC is moving quickly on fintech charters, which he refers to as “an old idea but a new project.”
Santori says fintech companies seeking charters will have a much easier time now that they don’t have to adhere to regulations on a state-by-state basis.