[Federal Register Volume 87, Number 220 (Wednesday, November 16, 2022)]
[Notices]
[Pages 68691-68692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24929]
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FEDERAL RESERVE SYSTEM
[Docket No. OP-1788]
Guidelines for Evaluating Account and Services Requests
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Notice and request for comment.
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SUMMARY: The Board of Governors of the Federal Reserve System (Board)
is issuing a request for comment on proposed amendments to its
Guidelines for Evaluating Account and Services Requests (Account Access
Guidelines or Guidelines) that would require the Federal Reserve Banks
(Reserve Banks) to publish a periodic list of depository institutions
with access to Reserve Bank accounts and/or financial services.
DATE: Comments must be received on or before January 17, 2023.
FOR FURTHER INFORMATION CONTACT: Jason Hinkle, Deputy Associate
Director (202-912-7805), Division of Reserve Bank Operations and
Payment Systems, or Gavin Smith, Senior Counsel (202-452-3474), Legal
Division, Board of Governors of the Federal Reserve System. For users
of TTY-TRS, please call 711 from any telephone, anywhere in the United
States.
ADDRESSES: You may submit comments, identified by Docket No. OP-1788,
by any of the following methods:
Agency website: http://www.federalreserve.gov. Follow the
instructions for submitting comments at http://www.federalreserve.gov/apps/foia/proposedregs.aspx.
Email: [email protected]. Include the docket number
in the subject line of the message.
FAX: (202) 452-3102.
Mail: Ann E. Misback, Secretary, Board of Governors of the Federal
Reserve System, 20th Street and Constitution Avenue NW, Washington, DC
20551.
All public comments are available from the Board's website at
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, and will not be modified to remove confidential, contact or
any identifiable information. Public comments may also be viewed in-
person in Room M-4365A, 2001 C St. NW, Washington, DC 20551, between
9:00 a.m. and 5:00 p.m. during Federal business weekdays.
SUPPLEMENTARY INFORMATION:
I. Background
On August 15, 2022, the Board adopted final Account Access
Guidelines that establish a transparent, risk-based, and consistent set
of factors for Reserve Banks to use in reviewing requests from
depository institutions to access Federal Reserve Bank accounts and/or
financial services (accounts and services).\1\ \2\ \3\ The final
Guidelines provide a process to evaluate requests for accounts and
services (access requests) in order to support a safe, inclusive, and
innovative payment system. The final Guidelines also include a tiered
review framework to provide additional clarity on the level of due
diligence and scrutiny that Reserve Banks will apply when reviewing
access requests from different types of institutions.
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\1\ 87 FR 51099 (Aug. 19, 2022).
\2\ Information on the Federal Reserve Banks' financial
services, including a list of such services, can be found at https://www.frbservices.org/.
\3\ The Guidelines do not apply to accounts provided under
fiscal agency authority or to accounts authorized pursuant to the
Board's Regulation N (12 CFR 214), joint account requests, or
account requests from designated financial market utilities, since
existing rules or policies already set out the considerations
involved in granting these types of accounts.
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The longstanding practice of both the Board and the Reserve Banks
has been to not disclose account-related information to the general
public on the basis that such information is considered confidential
business information.\4\ However, the development and publication of
the Account Access Guidelines prompted the Board to consider the
potential benefits of expanding the disclosure of the names of
institutions that have access to accounts and services. For example,
the Board received comments and inquiries from a range of stakeholders
calling for greater public disclosure of account-related information.
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\4\ See the preamble to the Federal Register notice adopting the
final Account Access Guidelines for further discussion of this
practice. The preamble notes that institutions may choose to self-
disclose their access to accounts and services. 87 FR 51099-51102
(Aug. 19, 2022).
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As a result, the Board has decided to reevaluate the Federal
Reserve's current disclosure practices and to propose an account
disclosure process that would balance the relevant benefits and risks.
II. Discussion
The Board considered a range of benefits, risks, and other factors
in developing the proposal. On the one hand, some information that
Reserve Banks use to evaluate access requests clearly is confidential,
such as trade secrets, private personal information, or confidential
supervisory information submitted in connection with an access request.
In addition, the Board acknowledges that institutions could face the
risk of reputational harm if they are denied access to accounts and
services, even if the denial is due to a Reserve Bank's evaluation of
information that is publicly available (e.g., information about an
institution's business model). The Board believes that, to the greatest
extent possible, the Account Access Guidelines should not discourage
institutions from requesting access to accounts and services by
subjecting requestors to the potential disclosure of confidential
information or risk of reputational harm.
At the same time, some institutions may not consider the fact that
they have access to accounts and services to be confidential business
information. Many institutions self-disclose such information, and
certain types of institutions generally have access to accounts and
services (e.g., federally-insured depository institutions). Moreover,
Reserve Banks currently provide disclosure of the identity of account
holders to financial institutions and other authorized users of the E-
Payments Routing Directory. Subject to the directory's terms and
conditions, authorized users can search for an institution by name,
routing number, city, or state and to determine whether the institution
uses the Fedwire[supreg] Funds Service (which requires a master
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account), the Fedwire Securities Service, and/or FedACH[supreg].\5\
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\5\ See https://www.frbservices.org/resources/routing-number-directory.
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In balancing these factors, the Board believes that the names of
institutions with access to accounts and services could be disclosed in
a more accessible, transparent way to the general public without
causing harm to these institutions or the Federal Reserve. The Board
therefore proposes to establish a requirement for Reserve Banks to
periodically publish a consolidated list of depository institutions
with access to accounts and services (whether the institution settles
its transactions directly in its own master account or settles its
transactions in its correspondent institution's master account).\6\
This proposal would greatly expand public access to key account- and
service-related information. The Board proposes to establish this
requirement by adding a new section 3 to the Account Access Guidelines
entitled ``Public Disclosure.''
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\6\ The Board discussed two options for the method of disclosing
accounts and services information to the general public: (1) an
online, searchable database and (2) a sortable list posted to a
public website operated by the Federal Reserve System (either the
Federal Reserve Banks or the Board). Analysis concluded that, on
balance, an online, searchable database would offer a slightly
easier method for the public to determine if a specific depository
institution has access to a Reserve Bank account and/or services.
However, the Board estimated that constructing an online searchable
database that provides validated data in a secured platform would
likely have a longer time to launch than producing a sortable list
published on our public website. As a result, the proposal
recommends the publication of a sortable list posted to a Federal
Reserve public website in the near term while continuing to research
the technical requirements of an online, searchable database.
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The key features of the proposed requirement would be:
(1) On a quarterly basis, the Reserve Banks would produce a single,
Federal Reserve System-wide report with two lists: (1) a list of
federally-insured depository institutions with access to accounts and
services, and (2) a list of non-federally-insured depository
institutions with access to accounts and services. The report would be
posted to a Federal Reserve System public website shortly after the end
of the quarter. The quarterly cadence would be intended to balance
providing timely public transparency with reducing potential
reputational harm to institutions that have had their access to
accounts and services removed since the previous report.
(2) The report would include two data elements for each institution
with access to accounts and services: (1) institution name, and (2) the
Reserve Bank district in which the institution is located.
(3) In a separate section, the report also would identify (1) the
institutions that have received access to accounts and services since
the publication of the previous report, and (2) the institutions that
no longer have access to accounts and services since the publication of
the previous report.\7\
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\7\ The list of depository institutions that no longer have
access to accounts and/or services would include both institutions
that lost access to accounts and services and those that gave up
their access to accounts and services voluntarily.
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III. Request for Comment
The Board requests comment on all aspects of the proposed new
Public Disclosure section of the Account Access Guidelines. In
particular, the Board requests comment on the following questions:
1. Would the two data elements in the proposed Public Disclosure
section appropriately balance providing public transparency with
protecting information that institutions consider to be confidential?
2. Would the proposed publication schedule (quarterly cadence)
appropriately balance providing timely transparency with reducing
potential reputational harm to institutions that no longer have access
to accounts and services? Would a less frequent cadence, such as semi-
annual publication, strike that balance more effectively?
3. Are there additional data elements for each institution with
access to accounts and services that the Federal Reserve should
consider publishing to provide greater transparency to the public (such
as the date on which access was provided, to extent known, or removed,
location of the institution, etc.)? Are there additional data elements
that the Federal Reserve should avoid publishing to prevent potential
harm to these depository institutions?
4. Are there additional actions that the Board or Reserve Banks
should take to provide transparency with respect to accounts and
services? For example, should the Board establish a requirement for the
Reserve Banks to publish a list of institutions that have requested an
account or access to services (including the date on which the request
was submitted, rejected, or withdrawn, etc.)?
5. Should categories of private sector institutions with access to
accounts and services that are not covered by the Guidelines, such as
designated financial market utilities, be scoped into the proposed
Public Disclosure section?
IV. Account Access Guidelines--Proposed Section 3
Guidelines Covering Access to Accounts and Services at Federal Reserve
Banks (Account Access Guidelines)
Section 3: Public Disclosure
The Board expects the Reserve Banks, working together, to produce a
single, quarterly Federal Reserve System-wide report with two lists:
(1) a list of federally-insured depository institutions with access to
accounts and/or services, and (2) a list of non-federally-insured
depository institutions with access to accounts and/or services.\8\
This report should be posted to a Federal Reserve System public website
with a short time lag after the end of each quarter. The report should
include two data elements: (1) institution name, and (2) the Reserve
Bank district in which the institution is located. In addition, the
report should identify (1) the institutions that have received access
to accounts and/or services since the publication of the previous
report, and (2) the institutions that no longer have access accounts
and/or services since the publication of the previous report.
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\8\ The proposed list would include all institutions that access
Reserve Bank priced financial services directly via a master account
and those that access services indirectly via a master account of
its correspondent bank.
By order of the Board of Governors of the Federal Reserve
System.
Ann Misback,
Secretary of the Board.
[FR Doc. 2022-24929 Filed 11-15-22; 8:45 am]
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