The Consumer Bankers Association (CBA) joined the American Bankers Association (ABA) today to urge the Federal Reserve to add additional safeguards to proposed Payment Account frameworks.
In a comment letter, the organizations said the Fed’s proposed Payment Account framework was a prudent approach to responsible innovation, but added that additional measures should be adopted to protect the safety and integrity of the U.S. payment system. The two associations said the proposal must be accompanied by strong risk management requirements, direct federal oversight and transparent application standards.
As part of their recommendations, the ABA and CBA urged the Fed to maintain key safeguards included in the proposal, including prohibitions on interest payments, daylight credit, discount window access and FedACH access. Additionally, the organizations called for clear, transparent and publicly available eligibility and review criteria for all Payment Account applicants, condition access on demonstrated capabilities in governance, independent risk management, BSA/AML/CFT compliance, sanctions compliance, cybersecurity and operational resilience; requiring all Payment Account participants to be subject to federal banking agency supervision; the adaptation of conservative, phased implementation; the prohibition on “nesting” arrangements and other activities that could allow third parties to circumvent Payment Account limitations; and preserving the distinction between Payment Accounts and Master Accounts.
The associations said that legal eligibility alone should not guarantee access to a Payment Account, and that the Federal Reserve must continue to evaluate applicants’ risk profiles, governance structures and supervisory oversight.