The basis for many financial services are deposit accounts. Because they form the bedrock of our financial system, they are regulated by federal and state government agencies under a wide array of laws and regulations. When including deposit accounts as part of your Platform service offering, you will need to be aware of, plan for, and comply with the following key financial service and banking regulations:

Onboarding

When you are adding a new client consumer customer to your Platform, they also will need to be onboarded to the Mbanq platform as a program manager for the Partner Bank. Regulations require that the client is satisfactorily known by the Platform and to Mbanq. In addition, how you, the Platform, market to and solicit the client must be compliant with regulations as well.

Soliciting the Client

Government regulations are clear regarding how you represent your services and target your potential clients with your sales and marketing programs.

UDAAP

Unfair, Deceptive, or Abusive Acts or Practices (UDAAPs) are legal standards that protect consumers from unethical or misleading marketing practices and tactics by financial product and service providers. UDAAPs are regulated under the Federal Trade Commission Act (FTC Act) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act.)

These regulations stipulate that you cannot mislead Clients with your marketing materials, such as bait and switch, where you market one product or interest rate and instead only have them qualify for another less advantageous rate. You also cannot discriminate against any particular protected groups such as race, religion, age, etc. Government agencies may require that you produce data that proves you are not discriminating against these groups or marketing around them. The primary federal agency that monitors and brings actions in such cases is the Consumer Financial Protection Bureau. Many states also have their own business and banking regulations in this area.

To help you stay in compliance with these regulations, Mbanq and the Partner Bank will review your marketing materials, websites and apps to ensure they follow the regulations.

Truth in Savings Act (TISA) - Reg DD

The Truth in Savings Act (TISA) is a federal law that requires banks to provide consumer Clients with accurate information about their deposit accounts so they can make informed decisions. The law is part of the Federal Deposit Insurance Corporation (FDIC) Improvement Act and is implemented by Regulation DD.

Knowing the Client

Centuries ago, the banker always knew the client because they lived in the same town or neighborhood, but today for many banks and financial service providers the Client could be from anywhere around the country or even around the globe. Yet, the need to know the Client is still critically important to the stability of the financial market and banking system. Today, it is not uncommon for a potential Client to not really be who they say they are. By using fake or synthetic identities they can for example steal money from the rightful owner or launder money that was obtained illegally.

CIP and KYC

A Customer Identification Program (CIP) is a US requirement that financial institutions must follow to verify the identity of customers before they can conduct financial transactions. The CIP is part of the USA Patriot Act and Know Your Customer (KYC) guidelines.

To ensure you know who your Clients are and have the data to back that up, at a minimum the Platform will be required to collect the following information for every potential Client:

• Name
• Address
• DOB
• Phone
• Email
• Tax ID (like SSN)
• Country of Residence
• Photo ID - Driver's License, Passport, College ID
  • Gov't ID Front
  • Gov't ID Back
• Video Auth (capturing a video selfie to match up with the photo on the ID)

For more details please refer to our Know Your Customer Guide.

This data will be matched with other databases using third party vendors to better ensure its authenticity. For more information regarding your obligations as a Platform offering financial services, please reach out to your Mbanq compliance professional.

Known Fraud and Watchlists

Your Client data must also be checked against various third party and government watchlists for known fraudsters.

OFAC

The Office of Foreign Assets Control ("OFAC") of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.

Mbanq will check your potential Clients against OFAC and other lists.

Privacy

As part of onboarding a Client, you will accumulate a number of pieces of personal information about the Client that you, as the Platform, are required to protect as if it were your own. This means that you have to safeguard this information from being viewed or stolen when in motion between systems as well as at rest in a database or file system.

CCPA and CPRA

The California Consumer Privacy Act (CCPA) has an array of consumer privacy rights and business obligations related to the collection and sale of personal information.

GDPR

The General Data Protection Regulation (GDPR) is a European Union regulation on information privacy in the European Union and the European Economic Area. It protects personal information. It outlines several requirements businesses must follow to process that data legally.

As a Platform, you will be asked to have a data privacy policy as well as to provide details on your data protection systems and practices. Your Mbanq compliance expert and onboarding teams can help you to assemble the necessary documentation.

Account Management and Transactions

Once you have successfully and compliantly onboarded a Client and a new Deposit Account (for example: a checking account or savings account) your compliance responsibilities do not end there. There are government and banking regulations that make it the responsibility of the Platform to protect the Client's funds as well as ensure that the account and the transactions that flow through it are not being used to commit a crime.

Electronic Funds Transfers

We have evolved to be a nearly cashless society, which means most of our financial transactions now take place electronically. This can mean moving money back and forth between banks via electronic check or providing Clients with Debit cards to access their account funds and use them electronically when making purchases. All of these electronic transactions are governed by Federal regulation with respect to safety, disputes, recourse, etc.

Electronic Funds Transfer Act - Reg E

The Electronic Fund Transfer Act (also known as Reg E) establishes the rights and liabilities of consumer Clients as well as the responsibilities of all participants in electronic funds transfer activities. It covers certain electronic banking and financial services such as debit card transactions, electronic withdrawals, transfers, and deposits.

Money Laundering

Money laundering is the process of taking money obtained via a criminal actions (ex. fraud, illegal drugs, illegal gambling, etc.) and knowingly passing it through other bank accounts so that in the end, it is difficult to track the money back to its original illegal source. Through money laundering, the criminal transforms the monetary proceeds derived from criminal activity into funds with an apparently legal source. The Platform is responsible for monitoring such actions and transactions. The Platform wherever possible should block such transactions from taking place and at a minimum report such activity to law enforcement and regulators whenever such activities are discovered or detected.

BSA

The Bank Secrecy Act (BSA) requires financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laundering

AML

The Anti-Money Laundering Act (AMLA) modernizes how federal agencies fight money laundering and other financial crimes.

Your Mbanq Compliance and Banking Operations professionals can assist you in setting up policies and practices to mitigate the possibility of money laundering occurring on your Platform. This can include setting transaction limits, restricting transfers to certain foreign countries, and generally monitoring transactions. Mbanq can also provide support for AML with its AI-driven transaction fraud detection systems.