Keith Raphael, Found and CEO of Straddle in this episode talks about compliance requirements for organizations that move money. We go over the specific examples and go in-depth into each scenario that triggers specific compliance requirements.
Key takeaways from the episode:
Reg E only applies to consumer transactions
Reg Z is applied to debt instruments belonging to the individual consumer.
Reg E is applied any time the consumer account is debited electronically.
Reg E is the safety net that makes consumers comfortable about the banking system. Specifically it offers proper protocols that forces everyone to abide by.
Reg E forces the FI or a payment processor or a marketplace owner - whoever is interacting directly with the customer, has to cover the transactions that are claimed as fraudulent by the consumer while they are under the investigation by the bank.
"You can't be too small for the AML rules". Whoever you are and whatever your intentions are, if you participate in the money laundering of any form (even if unintentionally), you will be punished.
If an entity is acting as an agent of the payee, they don't have to adhere to the same regulations as an MSB. FinCEN Payment processor exemption allows some money flows to not be considered as Money Transmitters.
The moment we are talking about storing value for an individual, processing P2P transactions - think MTL requirements.
Article on FBO accounts issued through Omnibus accounts through sponsor banks: https://open.substack.com/pub/aftfinance/p/what-are-omnibus-accounts?r=8gvix&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
CDD = Customer Due Diligence
My favorite quote from Keith: "If you solve for identity in payments, everything else is just accounting".And here is the article that I recently wrote on the subject of KYC/KYB requirements: https://aftfinance.substack.com/p/kyc-kyb-aml-and-bsa?r=8gvix