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Treliant Takeaway:

The new Federal Reserve guidelines for master account access have implications for fintech access to the Federal Reserve payments system. Treliant knows payments and FinTechs.  If your financial services company needs assistance, we can help.


On August 15, 2022, the Federal Reserve Board (FRB) issued guidelines to establish risk-based factors to be considered when evaluating requests for access to Federal Reserve accounts and payments services. As financial services firms offering innovative payment products or seeking novel bank charters have grown, a more varied set of institution types have sought access to master accounts and payment services offered by Reserve Banks. To insure consistent, transparent access while fostering innovation and promoting financial stability, the FRB has developed Guidelines for Evaluating Account and Services Requests (Guidelines).

Under the Guidelines, the Reserve Banks will only consider applications from entities that are eligible to maintain an account at a Reserve Bank under the Federal Reserve Act or other federal statute. Provision of master accounts or services must not adversely impact the Federal Reserve’s ability to implement monetary policy. Additionally, approved accounts should not create undue:

  • Credit, operational, or cyber risks to Reserve Banks;
  • Credit, liquidity, operational, settlement, or cyber risks to the payment system;
  • Risk of instability of the U. S. financial system; or
  • Risk of facilitating illicit activities, such as money laundering, terrorist financing, fraud, or cybercrimes.

The Guidelines include three risk-based tiers for application review, with the level of scrutiny of the application increasing as potential risk increases. Within each tier, application review will be risk-focused, so that institutions with higher risk business models will receive a more extensive review than institutions in the same tier with lower risk business models:

  • Tier 1 includes federally-insured eligible institutions. Applications in this tier will receive a streamlined review.
  • Tier 2 includes eligible institutions that are not federally-insured, but are subject to prudential supervision by a federal banking agency, and whose holding companies would be subject to Federal Reserve oversight. Applications from these types of institutions will receive an intermediate review.
  • Tier 3 include eligible institutions without federal deposit insurance that are not subject to prudential supervision from a federal banking agency at the institution or holding company level. In effect, this includes non-federally-insured institutions that are not covered by Tier 2. Applications from these institutions will be subject to the highest scrutiny.

As currently released, the Guidelines lack detail regarding the level of scrutiny and typical timelines for each tier. Some questions from comment letters remain unaddressed. For example, banking trade associations have complained that the Guidelines do not adequately address the standards for evaluating “novel charter” applications. Conversely, a FinTech trade association has cautioned against overly rigid standards that could exclude new market entrants or stifle innovation and questioned the assumption that market participants in Tiers 2 and 3 pose more risk to the payments system.  As Federal Reserve Governor Bowman noted, “However, these guidelines are only the first step in providing a transparent process. More work remains to be completed before a process is established to fully implement the guidelines.” Industry participants should stay tuned for further updates to the requirements to obtain master accounts.