On May 5, 2021, the Federal Reserve Board (the “Board”) published for public comment proposed guidelines (the “Account Access Guidelines”) for the 12 regional Federal Reserve Banks (the “Reserve Banks”) to use when reviewing requests for master accounts and other payments services. The Account Access Guidelines are intended to ensure that the Reserve Banks evaluate a transparent and consistent set of factors when reviewing requests for accounts and services.

The Board acted in response to technological innovations and other changes within the payments system, and the creation of “novel charter types” being authorized or considered across the country. Specifically, Connecticut, South Dakota, Wyoming, and the Office of the Comptroller of the Currency (the “OCC”) have either chartered or proposed new fintech or nontraditional bank charters. The Account Access Guidelines would directly impact these new charter types, and would establish uniform criteria for the Reserve Banks receiving an increasing number of inquiries and requests from novel institutions for accounts and services.

The Account Access Guidelines seek to advance the Board’s legal and policy goals of ensuring the safety and soundness of the banking system; effectively implementing monetary policy; promoting financial stability; protecting consumers; and promoting a safe, efficient, inclusive, and innovative payment system.

The Account Access Guidelines contain six principles. They are:

• Only institutions that are legally eligible for accounts and services are within the scope of the Account Access Guidelines;
• Provision of an account and services to an institution should not present or create undue credit, operational, settlement, cyber, or other risks to the Reserve Banks;
• Provision of an account and services to an institution should not present or create undue credit, liquidity, operational, settlement, cyber, or other risks to the overall payment system;
• Provision of an account and services to an institution should not create undue risk to the stability of the U.S. financial system;
• Provision of an account and services to an institution should not create undue risk to the overall economy by facilitating activities such as money laundering, terrorism financing, fraud, cybercrimes, or other illicit activity; and
• Provision of an account and services to an institution should not adversely affect the Board’s ability to implement monetary policy.

Proponents of fintech or novel charters should note the Board’s insistence that institutions be legally eligible for Federal Reserve accounts and services. The Board also suggested that it may clarify its interpretation of legal eligibility under the Federal Reserve Act for a Federal Reserve account and services. Such an interpretation could broaden or narrow legal eligibility and may be in response to former Acting Comptroller Brian Brooks’ position that the OCC payments charters would be eligible. Brooks had argued that payments companies chartered by the OCC are entitled to Federal Reserve access and services because they qualify as national banks “eligible for deposit insurance.” In his view, “eligibility” for deposit insurance was sufficient to trigger Federal Reserve access and services.

Novel charters proponents also should heed the Account Access Guidelines’ reliance on federal bank supervisors’ assessments of an institution to assess the Account Access Guidelines’ prudential and financial stability prongs. The Account Access Guidelines incorporate state and/or federal supervisors’ assessments into the Reserve Banks’ independent assessments of the applicants’ risk profiles. Because federally insured institutions are already governed by the principles cited in the Account Access Guidelines, access requests by federally insured institutions would be fairly straightforward in most cases. The Reserve Banks’ assessments of access requests from non-federally insured institutions would likely require more extensive due diligence. This aspect of the Account Access Guidelines suggests that non-federally insured banks and state-chartered non-depository institutions would face higher if not insurmountable barriers to accounts and services given their lack of a federal bank supervisor and potentially less rigorous state prudential and financial stability requirements.