Washington, D.C. — BPI Co-Head of Regulatory Affairs Paige Pidano Paridon issued the following statement today in response to the Federal Reserve Bank of Kansas City’s approval of a master account request for Kraken:
We are deeply concerned that the Federal Reserve Bank of Kansas City has approved an account request for a “limited purpose” master account—which appears to be a “skinny” account—before the Federal Reserve Board has finalized its policy framework for those accounts. This action ignores public comment that the Federal Reserve sought on this framework, and it was issued with no transparency into the process for approval or the risk mitigants that have been imposed to address the very significant risks it raises. Uninsured depository institutions, such as SPDIs, present substantially greater risks to the payment system than insured depository institutions, because these institutions are subject to a far less rigorous regulatory and supervisory framework.
We have several concerns with this approval:
- It front-runs the Board’s public comment process and violates the Board’s own policy on seeking public comment when it intends to make significant changes to the payments system.
- It calls into question whether the Board can ensure that the skinny account standards are applied consistently across Reserve Banks and whether the Board is appropriately supervising the Reserve Banks for compliance with account approval standards.
- It comes with no transparency about the controls and risk mitigants that have been imposed to protect against very real risks, including BSA/AML risk.
###
About Bank Policy Institute.
The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud and other information security issues.
Media Contact
Tara Payne
