February 25, 2019 / Source: FDIC

FIL-9-2019
February 22, 2019

Prepaid Accounts Rule: Interagency Consumer Compliance Examination Procedures

Printable Format:

FIL-9-2019 – PDF (PDF Help)

Summary:

The FDIC adopted revised interagency examination procedures to incorporate the Consumer Financial Protection Bureau's (CFPB) amendments to Regulation E and Regulation Z. The examination procedures may be helpful to financial institutions seeking to better understand how FDIC examiners will evaluate an institution's compliance with these regulations.

Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies to all FDIC-supervised institutions.

Statement of FIL Rescission Date: This Financial Institution Letter will retire to inactive status one year after the effective date of the Final Prepaid Accounts Rule, April 1, 2020.

Highlights:

• FDIC examiners will use the updated interagency examination procedures to evaluate financial institutions' compliance with amended Regulation E and Regulation Z for prepaid accounts, effective April 1, 2019.
• On October 3, 2016, the CFPB published its Final Rule for Prepaid Accounts to create comprehensive consumer protections for prepaid accounts. Specifically, the Rule expanded coverage of Regulation E to apply to prepaid accounts, established disclosure standards for prepaid accounts, and classified prepaid accounts that offer covered credit features as “hybrid prepaid-credit cards” subject to Regulation Z.
• Subsequent amendments to the Final Rule were made addressing error resolution and limited liability on prepaid accounts where the bank has not completed its customer identification and verification; application of the rule's credit-related provisions to digital wallets that are capable of storing funds; and other clarifications and minor updates. The effective date for the Final Rule is April 1, 2019.
• The FDIC and other member agencies of the Federal Financial Institutions Examination Council developed the new procedures to ensure consistent application of these regulatory changes.
• The updated interagency examination procedures reflect the 2016 Final Rule and all subsequent updates.

Continuation of FIL-9-2019

Distribution:

• FDIC-Supervised Institutions

Suggested Routing:

• Chief Executive Officer
• Chief Compliance Officer

Related Topics:

• Regulation E, 12 CFR 1005
• Regulation Z, 12 CFR 1026

Attachments:

• Final Reg Z exam procedures
• Final Reg E exam procedures
• Final Rule: Prepaid Accounts under the Electronic Fund Transfer Act (Regulation E) and the Truth In Lending Act (Regulation Z)
• Final Rule: 2018 amendments to the Prepaid Accounts under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z)

Contacts:

• Ardie Hollifield, Senior Policy Analyst, at (202) 898-6859 or [email protected]
• John Bowman, Senior Examination Specialist at (202) 898-6574 or [email protected]

Note:

FDIC financial institution letters (FILs) may be accessed from the FDIC's website at www.fdic.gov/news/news/financial/index.html.

To receive FILs electronically, please visit www.fdic.gov/about/subscriptions/fil.html.

Paper copies may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).