- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2022-11-16T17:50:00
A new Treasury Department report found as the trend of nonbank fintech companies providing financial services in partnership with regulated entities continues to grow, banking regulators need to increase oversight of these relationships to curb the risks they pose to the market and consumers.
The report, “Assessing the Impact of New Entrant Nonbank Firms on Competition in Consumer Finance Markets,” recommended U.S. banking regulators should provide a “clear and consistently applied supervisory framework for bank-fintech relationships” in response to potential risks and increased competitive pressures posed by nonbank fintechs to the consumer financial market.
The framework would likely be based on risk management guidance proposed in July 2021, in which the Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency offered guidance to financial institutions about how to enter into business relationships with third parties, including fintechs. Wednesday’s Treasury report recommended banking regulators finalize last year’s proposal.
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During a panel at Compliance Week’s Financial Crimes and Regulatory Compliance Summit, held June 10-11 in New York, experts discussed nuances in bank-financial technology partnerships, offering best practices for how banks should protect themselves.
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Federal regulators proposed to place nonbank financial institutions under supervision of the Federal Reserve Board if their activities are deemed to pose a systemic risk to the U.S. financial system.
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Four federal banking regulators have joined the Treasury Department’s Financial Crimes Enforcement Network in issuing a notice of proposed rulemaking that would require financial institutions to conduct more thorough risk assessments on their anti-money laundering/countering the financing of terrorism programs.
