Showing 10 posts by Joshua S. Rosenblatt.
A Cautionary Tale for Money Service Businesses: How Violating the Bank Secrecy Act Could Cost Millions
On February 27, 2017, The Financial Crimes Enforcement Network (“FinCEN”) fined Merchants Bank of California (“Merchants”) $7 million for what it called “egregious” violations of the Bank Secrecy Act (“BSA”). The Office of the Comptroller of the Currency simultaneously assessed a $1 million civil monetary penalty against Merchants because it violated two previous consent orders. Merchants is a community bank located in Carson City, California. The Bank had a large portfolio of Money Service Businesses (“MSBs”) customers. MSBs are generally recognized by federal regulators to include: (1) currency dealers or exchangers; (2) check cashers; (3) issuers of traveler’s checks, money orders, or stored value; (4) sellers or redeemers of traveler’s checks, money orders, or stored value; and (5) money transmitters. In Merchants’ case, it had 165 check-cashing and 44 money-transmitter customers, who often operated at great distances from the Bank. Compounding the situation was the fact that Bank insiders owned or managed a number of the MSB customers. Read More ›
New Hampshire legislators may exempt people who provide money transfer services for virtual currency, such as bitcoin, from being considered “money transmitters” for the purposes of the state’s licensing requirements. Specifically, the bill, HB436, would amend the definitions section (RSA 399-G:1) and the exemptions (RSA 399-G:3). As modified, the definitions would clearly define what a “virtual currency” is. The amended version would also create a new licensing exemption for “[p]ersons conducting business using transactions conducted in whole or in part in virtual currency.” Read More ›
Medieval kings have something in common with cutting-edge software developers forking new applications off the blockchain. Read More ›
It’s EZ as 1, 2, 3 . . . Disclosure, limited liability and periodic statements required for prepaid accounts under the CFPB’s new Prepaid Rule amending Regulations E and Z
The Consumer Financial Protection Bureau (CFPB) recently issued a final rule, the “Prepaid Rule,” amending Regulations E and Z. The Prepaid Rule affects issuers of prepaid personal, household or family accounts by expanding the applicability of Regulations E and Z as of October 1, 2017. It brings “prepaid accounts” into Regulation E’s definition of “account” and broadens the reach of Regulation Z’s overdraft credit features. While this rule applies to digital wallets and P2P payments, the CFPB did not extend this rule to virtual currency. Read More ›
It seems like everyone is discussing “blockchain,” but few have taken the time to really define what blockchain is (and is not). In particular, the federal government has not reached a consensus on what the term should mean. Recently a group of blockchain experts from academia, private practice, and government relations sat down together to do just that—define “blockchain” – at the Blockchain Definition on Capitol Hill event, hosted by MIT Media Lab, Congressman David Schweikert, the Chamber of Digital Commerce, and the DC Blockchain Center. This article shares one definition which was submitted for consideration at the event. Read More ›
Are Prices Free Speech? The Supreme Court is set to weigh in on whether merchant surcharges are protected as free speech
The Supreme Court recently agreed to review a case from the Second Circuit Court of Appeals holding that New York’s anti-surcharge provision was constitutional. Similar cases–with differing outcomes–have been heard in the Fifth and Eleventh Circuits, as well as a District Court in the Ninth Circuit. The issue is this: in each of the states at issue, statutes prohibit “surcharges” but permit discounts to cash purchasers, whether explicitly (California and Florida) or by implication (New York and Texas). For example: Read More ›
Telemarketers are now prohibited from accepting four methods of payment that the Federal Trade Commission (“FTC”) believes allow fraudulent telemarketers to avoid detection and prevent chargebacks.
“Con artists like payments that are tough to trace and hard for people to reverse,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The FTC’s new telemarketing rules ban payment methods that scammers like, but honest telemarketers don’t use.”1 Read More ›
Community Banks need to be aware of the risks posed by cryptocurrencies like Bitcoin, because their prevalence will only increase, writes the Federal Reserve Bank of San Francisco. Wallace Young, the Director of the Federal Reserve Bank of San Francisco, in the recent article “What Community Bankers Should Know About Virtual Currencies” in Community Banking Connections, outlines four risks undertaken by community banks that interact with businesses in the virtual currency ecosystem: Compliance, Reputational, Credit, and Operational. Read More ›
Does your company lease point-of-sale (POS) credit card terminals to customers in Tennessee? Or, are you a Tennessee merchant who accepts credit or debit card sales? If so, your company will want to be aware of a new Tennessee law that regulates POS terminal contracts. Read More ›
Those practicing in the payments space know that recorded judicial decisions are few and far between concerning disputes over credit card processing contracts. Terms and conditions in these contracts are often created with heavy reliance on general contract principles, even though the operative acts of the parties are highly unique and subject to extensive third-party rules. The January 15, 2015 decision in Schnuck Markets v. First Data Merchant Data Services Corp. and Citicorp Payment Services, U.S.D.C. E.D. Missouri, No. 4:13-CV-2226-JAR, is one of those rare cases, and is a decision highlighting the importance of careful contract drafting in the context of the merchant processing relationship. Read More ›
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Christopher C. Tieke is an associate in Frost Brown Todd's Louisville office, focusing his practice on business litigation. He graduated from the University of Cincinnati College of Law, with magna cum laude honors; served as an Associate Member of the University of Cincinnati Law Review; and participated in the Entrepreneurship and Community Development Clinic.