The Federal Reserve’s new Account Access Guidelines provide “much-needed clarity and consistency”, according to Rob Nichols, president and CEO of the American Bankers Association (ABA).
The Fed’s final guidelines establish a transparent, risk-based, and consistent set of factors for reserve banks to use in reviewing requests to access Federal Reserve accounts and payment services.
Institutions increasingly offering new types of financial products are requesting access to master accounts and payment services offered by the Federal Reserve Bank network.
Nichols explained: “Allowing new financial players to access the Federal Reserve system without requiring them to meet the same high standards as banks poses real risks.”
“We will watch carefully to ensure that these new guidelines, particularly the tiering requirements, recognize those risks, and we look forward to seeing the board and the reserve banks apply these guidelines fairly but rigorously.”
The new tiered review framework included in the guidelines will provide clarity on the level of due diligence and scrutiny that reserve banks will apply to different types of institutions with varying degrees of risk. For example, institutions with federal deposit insurance will be subject to a more streamlined level of review, the Fed indicated.
Meanwhile, a more extensive review will be applied to institutions engaging in new and innovative activities for which authorities are still developing supervisory and regulatory frameworks.
The guidelines’ tiered review framework provides comparable treatment between non-federally insured institutions chartered under state and federal law. The final guidelines are similar to those put forward by the Fed in its May 2021 proposal and March 2022 supplemental proposal.
Lael Brainard, vice chair of the Federal Reserve Board, said: “The new guidelines provide a consistent and transparent process to evaluate requests for Federal Reserve accounts and access to payment services in order to support a safe, inclusive, and innovative payment system.”