Financial Institutions and Markets (J)

Financial Institutions and Markets (J)

Authors: Erin F. Fonté & Brenna E. McGee

Not long ago, financial technology (FinTech) startups were all seeking to disrupt the market for financial services and compete directly with financial institutions (FIs) for customers. But as these startups have grown into more mature companies, cooperation with FIs has come to replace disruption for many FinTech firms. These companies have realized that FIs can help scale their technology to larger bases of potential users, and can also help FinTechs raise capital by showing strong partnerships and FI distribution channels.

Read more: Access vs. Security: Takeaways For U.S. Financial Institutions from the European PSD2 Open API...

Authors: Katherine Hayes, Partner and Greg Stirling, Senior Associate

Round 2 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has examined the financial planning industry. The hearings finished in April, and concluded with some damning recommendations made by counsel assisting.

While we don’t yet have any findings from Round 2, one thing is for certain: the Commission has already had an impact. Numerous officeholders have departed from leading Australian companies, financial planning and wealth management businesses are being sold off, and class actions foreshadowed.

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Author: Jerry G. Sanchez

July 13, 2018, marks the comment deadline for the federal bank agencies’ proposed capital rules amendments to grant all banks the option to elect a three-year phase-in of the “day 1” regulatory capital effects from adopting the new and burdensome FASB Current Expected Credit Losses (CECL) methodology under GAAP (scheduled to become effective for the first group of banking organizations in their first fiscal year beginning after December 15, 2019). Critically, the election to use the three-year phase-in approach would be required to be made by the end of the first regulatory reporting period in which the banking organization applies CECL, otherwise it is forfeited. The proposed three-year phase in period affords community banks with much-needed time to plan and test for CECL implementation thereby easing some of the CECL anxiety community bankers are experiencing.

Read more: Federal Bank Agencies Set to Grant Community Banks Temporary Reprieve from FASB’s Burdensome...

Authors: R. Lance Boldrey, Brenna E. McGee, Richard Y. Cheng

Coauthored by Dykema Summer Associate Shaun Sullivan-Towler.

For financial institutions interested in banking state-legal marijuana businesses, 2018 has been a rollercoaster. In January, Attorney General Jeff Sessions rescinded the Obama-era policy of lenient federal enforcement, creating new confusion for banks and credit unions about the future of marijuana-related banking. Many feared that the Financial Crimes Enforcement Network (FinCEN) would withdraw or amend its guidance as well, thereby eliminating the only federal guidance directed to financial institutions on banking marijuana businesses. But FinCEN has since been clear that its guidance remains in place and announced that, as of March 31, 2018, a total of 411 banks and credit unions now provide services to marijuana-related businesses, up from 365 a year ago.

Read more: The STATES Act, Rooted in Federalism, Would Address Systemic Risk in Cannabis-Related Banking

Bank Indonesia (“BI”) has issued the newest regulation on Electronic Money (“E-Money”), i.e. Bank Indonesia Regulation No. 20/6/PBI/2018 on Electronic Money (“PBI 20/2018”).

PBI 20/2018 fully replaced the previous regulations on E-money, which are Bank Indonesia Regulation No.11/12/PBI/2009 and its amendments (“Previous Regulations”). By issuing PBI 20/2018, BI aims to adjust the technological developments related to financial matters by regulating several additional requirements and obligations which were not regulated in the Previous Regulations.

Regulation No. 20/2018 introduces several key changes by setting up the provisions mentioned as below:

1. Classifications of E-Money;

2. E-Money Operators;

3. E-Money Issuers;

4. Organization of E-Money;

5. Unification, merging, segregation and takeover of E-Money administrators;

6. Reporting and supervision; and

7. Sanctions.

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