Bank Law Monitor

Bank Law Monitor

A Legal Blog for the Financial Services Industry

Update: DOJ Rescinds the Cole Memo—FinCen Guidance Still in Effect, For Now…

Posted in Marijuana, Regulatory Developments

In the wake of the shift in federal marijuana enforcement policy, financial institutions have been left to speculate the risk in offering financial services to marijuana-related businesses. While the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued guidance in 2014 that laid out a process for financial institutions to open accounts for marijuana-related businesses, that guidance was premised on the enforcement priorities of the Cole Memo. After last month’s rescission of the Cole Memo, financial institutions have been patiently waiting for any guidance from FinCEN as to how to proceed with providing financial services to marijuana and marijuana-related businesses. And after weeks of waiting, stakeholders are finally receiving confirmation that the FinCEN guidance remains in effect—for now.

In the wake of the Cole Memo rescission, members of Congress have been advocating for FinCEN’s guidance to remain in place. A bipartisan group of 31 members of the House of Representatives jointly sent a letter to FinCEN encouraging the agency to continue following the 2014 guidance. The House members stated in the letter that “FinCEN’s stated priorities have allowed [marijuana] businesses to conduct commerce more safely through financial institutions which reduces the use of all cash, improves public safety, and reduces fraud,” and warned FinCEN that rescinding its guidance would “inject uncertainty into the financial markets.” Continue Reading

DOJ Rescinds the Cole Memo—What It Means for Your Financial Institution

Posted in Marijuana, Regulatory Developments

Reiterating that Congress considers marijuana to be a “dangerous drug” and marijuana activity to be a “serious crime,” Attorney General Jeff Sessions today issued a memo to all U.S. attorneys rescinding various memoranda related to enforcement of federal marijuana laws issued during the Obama administration. Included in the rescinded memos was the prominent “Cole Memo,” which discouraged federal prosecution of anyone in compliance with the marijuana laws of their state. As we previously discussed, the Cole Memo specifically provided the justification on which many banks and credit unions decided to offer financial services to marijuana and marijuana-related businesses. While the full effects of Sessions’ memo remain unclear, today certainly appears to mark a shift in the federal government’s stance on state-legalized marijuana, and the future of marijuana banking is as hazy as ever. Continue Reading

Reg CC Goes “Paperless”: New Amendments Address Electronic Checks, Remote Deposit Capture, and Other Modern Banking Trends

Posted in Banking, Mobile Banking, Regulatory Developments

Regulation CC first became law back in 1992. Yes, that was when Sir Mix-a-Lot was “back” on the top of the charts, audiences were eating up Silence of the Lambs, and bowl cuts were a thing. Times have changed, but oddly Reg CC hasn’t. Since 1992, Reg CC—which governs funds availability and how financial institutions handle check collection and return processes—has stayed mostly the same. But think about how much banking has evolved over the last quarter century, especially in light of the widespread use of electronic items, checks, and processing systems.

You might be surprised to learn that a large chunk of Reg CC still applies only to paper checks. Thankfully, the law is getting a modern makeover to acknowledge the fact that today’s check collection world is now virtually entirely electronic. In June 2017, the Federal Reserve issued final amendments to Reg CC to get with the times, and the CFPB is expected to do the same shortly. These amendments will take effect on July 1, 2018, and they aim to recognize current collection practices.

Here are the highlights of a few of the Federal Reserve’s amendments to Reg CC: Continue Reading

Update: The CFPB’s Proposed Arbitration Rule—Dead or Alive?

Posted in CFPB

Update (August 28, 2017): A lot has happened since our original post on the CFPB’s arbitration rule, and more is on the way. The CFPB’s arbitration rule is definitely alive and breathing, for the time being:

  • The CFPB published its long-awaited arbitration rule on July 19, which, as discussed in more depth below, regulates arbitration agreements in contracts for certain consumer financial products or services (such as contracts involving deposit and savings accounts, credit cards, student loans, automobile leases, etc.).
  • In response – and only six (6) days after the rule’s publication – the House of Representatives voted to disapprove the CFPB’s rule, using its authority under the Congressional Review Act. The House’s vote to repeal passed by a 231-190 vote.
  • The vote to stop the CFPB’s rule now moves its way to the Senate. While a resolution to disapprove the CFPB’s rule has been introduced in the Senate, it is not expected that a vote will occur until at least September 5 when the Senate returns from recess. Under the Congressional Review Act, the Senate has 60 days from the CFPB rule’s publication date (July 19, 2017) to pass its disapproval resolution.
  • If the Senate also votes to disapprove the CFPB’s rule, the fate of the CFPB’s rule would lie in the hands of President Trump. Interestingly, on July 24, the White House issued a statement indicating that the Administration strongly supports disapproval of the CFPB’s rule. In fact, the Statement indicated that “if [the House’s disapproval resolution] were presented to the President in its current form, his advisors would recommend that he sign it into law.” Frankly, if the resolution to disapprove the CFPB’s arbitration rule makes it to President Trump’s desk, it seems likely that he will side with both chambers of Congress and also disapprove the CFPB’s arbitration rule.

Financial institutions should keep an eye on the status of the CFPB’s arbitration rule and act accordingly when the dust settles. More to come. Continue Reading