iStock illustration
The Conference of State Bank Supervisors has launched a nationwide program that will offer a single exam to payments firms, ensuring that they satisfy all state regulatory requirements.
Known as MSB Networked Supervision, the program will apply to 78 of the nation’s largest payments and cryptocurrency companies that together move more than $1 trillion a year in customer funds, the CSBS said in a statement.
The CSBS said the exam protocol would let states fine-tune a risk-based approach to each company’s operations, better positioning states to follow up when compliance issues arise.
“The single exam will be led by one state overseeing a group of examiners sourced from across the country,” the CSBS said. “By relying on experts across the state system – including in cybersecurity and anti-money laundering – regulators will gain more insight while also freeing up state resources.”
This initiative came out of the CSBS Fintech Industry Advisory Panel, which noted the need to increase multistate exam coordination.
“One company, one exam is a significant and important shift in how state regulators will ensure compliance with consumer protection and safety and soundness standards for the largest payments companies,” Kevin Hagler, Georgia Department of Banking and Finance commissioner and CSBS board chair, said in the statement. “By working together and relying on the excellent work of fellow state regulators, we will be able to do even more.”
Rosemary Gallagher, a Western Union associate general counsel, said Western Union participated in a pilot for the exam with CSBS.
“We firmly believe that the impact of this new approach to multistate exams will be significant in terms of driving harmonization and streamlining of state supervision across the board,” Gallagher said.
Acting Comptroller of the Currency Brian Brooks recently said the OCC would start accepting applications for a charter for payments companies that do not take deposits, a move the CSBS opposed.
“State regulators are opposed to this unconstitutional expansion of power,” CSBS President and CEO John Ryan said in a statement. “While the OCC disregards the statutory limits of its authority as set by Congress and the rule of law in ignoring a federal court ruling, state regulators are focused on their responsibility to protect consumers and foster economic development across the country.”
