A transparent, risk-based, and consistent set of factors for Federal Reserve Banks to use in reviewing requests to access Federal Reserve accounts and payment services is the aim of final guidelines issued by the central bank Monday, the Federal Reserve said.
In a release, Federal Reserve Board Vice Chair Lael Brainard said the guidelines will support a safe, inclusive and innovative payment system. The guidelines will be effective once they are published in the Federal Register, the agency added.
The guidelines were partly issued, the Fed indicated, by the growth of institutions offering new types of financial products or developing “novel charters.” Many have requested so-called “master accounts” and payment services offered by Federal Reserve banks, the agency said. The guidelines will be used by the banks to evaluate the requests with a “transparent and consistent set of factors.”
A tiered review framework is included in the guidelines, the Fed said, to provide additional clarity on the level of due diligence and scrutiny that the reserve banks will apply to different types of institutions with varying degrees of risk. Under that regime, federally insured banks will have a lower level of scrutiny, while those engaging in “novel activities” will have more eyes on their efforts.
“For example, institutions with federal deposit insurance would be subject to a more streamlined level of review, while institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review,” the agency said.
The Fed also said that, in response to public comments, the tiered review framework in the final guidelines was refined to provide more comparable treatment between non-federally insured institutions chartered under state and federal law.
Final guidance (Federal Register notice)