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Legislative Experts Return to Provide Regulatory Update

Kim Ford And Kurt HelwigKimberly Ford, Vice President of Global Government and Public Affairs for First Data, and Kurt Helwig, president and CEO of the Electronic Funds Transfer Association (EFTA) returned to provide their tag-team legislative and regulatory overview at the 2019 AFT Spring Summit in Tucson, Ariz.

“There really isn't much going on in Washington,” Helwig said tongue-in-cheek before admitting that now is an especially difficult time for banking legislation. “Timing really matters because there is an opportunity for things to pass.” Ford noted, “In terms of specific items, for financial services, we're not going to see another big act or regulation pass this Congress for sure.”

Nevertheless, Helwig and Ford detailed regulatory agency priorities in 2019:

  • FTC: Privacy and data security, enforcement of consumer financial protection laws, fintech, and technology task force.
  • OCC: Special-purpose fintech bank charters, cybersecurity and operational resiliency, credit risk, BSA/AML compliance, consumer-compliance change management, and internal controls around product and service delivery.
  • FDIC: Improve the de novo application process, continue review of brokered deposit regulations, simplify overly complex capital requirements, tailor regulations appropriately, and refine the resolution process for large institutions.
  • Fed: Supervisors of large financial institutions will focus on capital, liquidity, governance and controls, and recovery and resolution planning; supervisors of community financial institutions will focus on credit risk, operations risk, sales practices and incentive compensation, and BSA/AML.

Helwig and Ford also highlighted the coming together of the second Payment Services Directive (PSD2), and the General Data Protection Regulation (GDPR), both European Union directives that could affect U.S. based organizations. The convergence centers around five pillars:

  1. Enhanced customer and data protection
  2. Enhanced data compliance
  3. Data quality (accuracy, consistency and lineage)
  4. Enhanced user experience
  5. Enhanced competitiveness

“So that means if you are in business and you want to do business in the European Union, you know that you have to build privacy into the design from the outset,” Ford said.

The reg rundown looked at privacy proposals such as the U.S. Senate Commerce Committee’s bipartisan working group driving an effort, likely to include consent, opt-out, access and correction, but unlikely to include a federal data breach notification standard. “Even though we don't have a constitutional right to privacy, we have the Gramm-Leach-Bliley Act, which is a big privacy law affecting financial institutions and financial data,” Ford said.

They touched on the California Consumer Privacy Act, which goes into effect Jan. 1, 2020; and the CCPA-type bills introduced in almost a dozen states. “I think that the California law becomes sort of the floor for any kind of federal privacy legislation,” Helwig held.

Ford and Helwig also weighed on last October’s invitation for public comment by the Federal Reserve on faster payments. They acknowledged there is a question regarding the Fed’s potential role as disruptor.

The EFTA and First Data spokespeople observed the Fed requests for public comments took many by surprise, and it led to critical questions emerging regarding competition versus other commercially available offerings. “If I'm in this space and I'm providing some of these products and services, I know I have to look at the Fed as a potential competitor,” Helwig said. In addition, the infrastructure-build requirements remain a large consideration, as well as the timing of outcomes and decision that may be come in late 2019.

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