Headlines
- FDIC and OCC Heads Comment on Executive Order Targeting Unlawful Debanking
- Banks Receive New Guidance on Customer Identification Programs from Federal Regulators
- Federal Reserve Ends Special Supervisory Program for Novel Banking Activities
- Massachusetts Attorney General Offers Guidance on Compliance with Junk Fees Rule
- Other Developments: FDIC Official Sign, Bank Accounting, and Personal Financial Data
1. FDIC and OCC Heads Comment on Executive Order Targeting Unlawful Debanking
Comptroller of the Currency Jonathan Gould and Acting FDIC Chairman Travis Hill recently issued public statements in support of President Trump’s executive order titled Guaranteeing Fair Banking For All Americans. The executive order issued on August 7 asserts that “[f]inancial institutions have engaged in unacceptable practices to restrict law-abiding individuals’ and businesses’ access to financial services on the basis of political or religious beliefs or lawful business activities.” On August 7, Comptroller Gould said that the OCC has already taken steps to “depoliticize the federal banking system consistent with” the executive order, such as removing references to reputation risk from its handbooks and guidance documents. On August 8, Acting Chairman Hill issued a statement in support of the objectives of the executive order, indicating that the FDIC plans to issue a proposed rule “that would prohibit examiners from criticizing institutions on the basis of reputational risk or directing or encouraging institutions to close accounts on the basis of political, social, religious, or other views.” Comptroller Gould also said that the OCC would soon propose a rule to remove these same references from its regulations. Click for a copy of the executive order.
Nutter Notes: While not imposing any new or additional legal obligations on banks, the executive order states that “it is the policy of the United States that no American should be denied access to financial services because of their constitutionally or statutorily protected beliefs, affiliations, or political views, and to ensure that politicized or unlawful debanking is not used as a tool to inhibit such beliefs, affiliations, or political views.” The order gives the federal banking agencies 180 days to “remove the use of reputation risk or equivalent concepts that could result in politicized or unlawful debanking, as well as any other considerations that could be used to engage in such debanking,” from their guidance documents, manuals, and other regulatory materials. The order also directs the federal banking agencies to enforce the order’s stated policies by “levying fines, issuing consent decrees, or imposing other disciplinary measures against any financial institution” found to have engaged in “politicized or unlawful debanking that violates applicable law.”
2. Banks Receive New Guidance on Customer Identification Programs from Federal Regulators
The Federal Reserve, with the concurrence of the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), has issued an order granting banks an exemption from the requirement of the Customer Identification Program (CIP) Rule permitting banks subject to the Federal Reserve’s jurisdiction to use an alternative collection method to obtain Taxpayer Identification Number (TIN) information from a third-party source rather than directly from the customer prior to opening an account. The order, as explained in the August 15 Federal Reserve Supervision and Regulation Letter no. SR 25-2, requires that banks relying on the exemption must comply with all other applicable requirements of the CIP Rule. The CIP Rule generally requires a bank to obtain TIN information from the customer, except with respect to credit card accounts. The Federal Reserve and FinCEN have recognized that considerable changes in the way that customers interact with banks and receive financial services have occurred since the rule was adopted, including the availability of new methods that a bank can use alongside TIN information to form a reasonable belief that the bank knows the true identity of each customer. Click for a copy of Supervision and Regulation Letter no. SR 25-2 and to access the order.
Nutter Notes: The CIP Rule implements section 326 of the USA PATRIOT Act. Among other things, the CIP Rule requires a bank to implement written procedures that includes risk-based verification procedures that enable the bank to form a reasonable belief regarding the identity of each customer, including, at a minimum, obtaining the customer’s name, date of birth, address, and TIN, and to establish risk-based procedures to verify the identity of new customers. If a bank relies on the exemption order to use an alternative collection method when obtaining TIN information about a customer, the bank must include an alternative collection method for TIN information in its existing risk-based, written CIP procedures that combat money laundering, terrorist financing, and other illicit finance activity. The order applicable to Federal Reserve member banks and other banks subject to the jurisdiction of the Federal Reserve is substantially similar to an order issued by FinCEN in June that permits depository institutions regulated by the OCC, FDIC, or NCUA to permit collection of TIN information from a third party rather than from the customer.
3. Federal Reserve Ends Special Supervisory Program for Novel Banking Activities
The Federal Reserve has announced that it will sunset its novel activities supervision program and return to monitoring banks’ novel activities through its normal supervisory processes. The August 15 announcement affects state-chartered member banks and other banks subject to the jurisdiction of the Federal Reserve. The Federal Reserve started its novel activities supervision program to supervise certain crypto asset and fintech activities by banks it oversees. According to the announcement, the Federal Reserve believes it has strengthened its understanding of those activities, related risks, and bank risk management practices sufficiently to integrate the supervision of those activities into its standard supervisory processes. As a result, the Federal Reserve is rescinding its 2023 supervisory letter that created the program. Click for a copy of the announcement.
Nutter Notes: The Federal Reserve first announced its novel activities supervision program on August 8, 2023. The program was established to enhance the supervision of complex partnerships with non-bank financial technology (fintech) companies, crypto-asset related activities, and distributed ledger technology (DLT). The program was meant to work with existing Federal Reserve supervisory teams to monitor and examine novel activities conducted by supervised banking organizations. The Federal Reserve notified in writing those banking organizations whose novel activities were subject to examination through the program. The Federal Reserve program also described the process for a state bank supervised by the Federal Reserve to follow before engaging in certain activities involving tokens denominated in national currencies and issued using DLT or similar technologies to facilitate payments (dollar tokens). Because of the recission of that program, banks supervised by the Federal Reserve are no longer subject to the nonobjection process for dollar token activities.
4. Massachusetts Attorney General Offers Guidance on Compliance with Junk Fees Rule
The Massachusetts Office of the Attorney General has published guidance on its new regulation prohibiting unfair and deceptive fees, commonly known as the “junk fees” rule. The guidance issued on July 29 clarifies that the junk fees rule applies to most businesses operating in Massachusetts, including banks, but only where the regulation is not preempted by federal law. The new Massachusetts junk fees rule prohibits “hidden, surprise, or unnecessary costs” by requiring businesses to (1) clearly and conspicuously disclose the total price, including all mandatory fees, (2) provide a clear and easy method for canceling subscriptions or recurring charges, and (3) describe the nature, purpose, and amount of fees and charges. On the last point, the new guidance explains that the nature or purpose of any fee or charge disclosed to the consumer “must accurately reflect the purpose for which the seller uses the money collected from such fee or charge.” The guidance explains that some fees may be disclosed using a concise phrase, “provided the amount charged is reasonably reflective of the cost the seller incurs for the purpose the fee is charged.” The new junk fees rule will become effective on September 2, 2025. Click for a copy of the guidance on the new rule.
Nutter Notes: Whether the Massachusetts junk fees rule applies to a bank depends on a number of factors, including the bank’s charter and the nature of the fee. The legal standard for federal preemption, originally stated in the 1996 Supreme Court case Barnett Bank of Marion County v. Nelson, was codified by the Dodd-Frank Act Wall Street Reform and Consumer Protection (Dodd-Frank) Act. Under the Barnett Bank standard, a federal law preempts a state law that does not otherwise discriminate between federal and state chartered banks only if the law “prevents or significantly interferes” with a bank’s exercise of its power. This standard was reinforced for national banks by the 2024 Supreme Court case Cantero v. Bank of America, N.A. The Supreme Court explained in Cantero that the Barnett Bank standard does not create a bright line test, but requires “a practical assessment of the nature and degree of interference caused by a state law.” So, questions about whether and to what extent the new junks fees rule applies to banks is complex and will likely be subject to case-by-case interpretations.
5. Other Developments: FDIC Official Sign, Bank Accounting, and Personal Financial Data
- FDIC Proposes Amendments to Rules on FDIC Official Digital Sign
The FDIC on August 15 requested public input on a notice of proposed rulemaking to amend regulations governing signage requirements for banks’ digital deposit-taking channels and automated teller machines (ATMs) and like devices. Public comments are due by October 20, 2025. Click for a copy of the proposed rule.
Nutter Notes: The FDIC has determined that certain requirements implemented by its 2023 final rule governing signage for digital deposit-taking channels and ATMs may raise operational challenges for banks or result in consumer confusion. Among other changes the FDIC is considering, the proposed amendments would provide additional flexibility with respect to the color, font, and size that banks may use when displaying the FDIC official digital sign.
- OCC Updates Bank Accounting Advisory Series
The OCC on August 15 released the 2025 edition of the Bank Accounting Advisory Series (BAAS). The BAAS contains OCC staff responses to frequently asked questions from the banking industry and bank examiners on a variety of accounting topics and promotes consistent application of accounting standards and regulatory reporting among banks. Click to access the BAAS.
Nutter Notes: The new edition of the BAAS revises certain content for general clarity and removes questions that are no longer relevant. According to the OCC, the updates do not alter prior conclusions or interpretations of the OCC Office of the Chief Accountant.
- CFPB Reconsidering Personal Financial Data Rights Rule
The CFPB on August 22 published a notice in the Federal Register requesting public input to inform its reconsideration of four issues related to personal financial data rights under Section 1033 of the Dodd-Frank Act. Section 1033 outlines the requirement for financial institutions and other “covered persons” to make financial transaction data available to consumers and authorized third parties upon request, under rules prescribed by the CFPB. Public comments are due by October 21, 2025. Click for a copy of the Federal Register notice.
Nutter Notes: According to the CFPB, the issues under consideration are: (1) the proper understanding of who can serve as a “representative” making a request on behalf of the consumer;(2) the optimal approach to the assessment of fees to defray the costs incurred by a “covered person” in responding to a customer driven request; (3) the threat and cost-benefit pictures for data security associated with Section 1033 compliance; and (4) the threat picture for data privacy associated with Section 1033 compliance.
