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to be UDAAPs. With relatively little precedent to date, this can be a challenge. “Everyone wants to
be as careful as possible when
it comes to UDAAP, but it’s a gray area right now,” explains Gizelle Barany, general counsel at Marqeta.
Several people I interviewed are focused on how the CFPB will respond to the development of real-time payment systems. In July 2015, the agency issued “guiding principles” for “faster” payment systems, in which it pro ered its views on various consumer protec- tion issues that these systems could present.
Many companies—and even the Federal Reserve—have ideas for faster payment systems in the pipeline. As these ideas mature and take shape in 2016, many expect the CFPB to take notice.
Money services Business Laws
Another primary area of focus
for many in the payments industry is money services business (MSB) laws. As many readers know, all but a handful of states have laws that require MSBs to be licensed. Among other things, most of these laws require a license to
“receive money for transmission.” This broad phrase can capture many companies involved in delivering payment services that would not have thought of them- selves as MSBs.
Almost every company in the payments space that isn’t operating under a bank charter is concerned with these laws in some way— either because they are licensed under these laws or because they need to be vigilant about avoiding activities that could trip MSB licensing requirements.
A number of people I interviewed speci cally noted that the uncer- tainty about how these laws apply to emerging payment technologies creates challenges. This is aug- mented by the fact that di erent regulators have di erent interpre- tations of the laws.
The lawyers and compliance personnel for digital currency service providers with whom I spoke are particularly focused
on MSB laws. The application of MSB laws to these service pro- viders has been a tricky subject. On the one hand, the scope provi- sions of many MSB laws (which often apply to transactions involv- ing any form of “monetary value,”
not just “money”) are broad enough to capture some digital currency service providers—or,
at least, enable regulators to interpret them that way. However, many of the substantive provisions applicable to MSB licensees do not account for the nature of digital currencies and impose requirements that can be uniquely challenging for digital currency service providers to comply with.
I co-wrote an article in a November 2015 issue of Pay Gov that delved into this in greater detail. Digital currency service providers antici- pate that there will be new stat- utes, regulations and regulatory interpretations in 2016 that will help clarify whether and how MSB laws apply to them.
Vendor Management— And Being Managed
Another topic on which in-
house legal and compliance personnel are focused is vendor management. Companies rely
on vendors for many functions, and it is critical that they ensure that the vendors understand their legal obligations.
Conversely, several people I interviewed are with companies that are subject to bank vendor management programs, and
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