Summary: | The FDIC is clarifying its policy and supervisory approach related to facilitating payment processing services directly, or indirectly through a third party, for merchant customers engaged in higher-risk activities. Facilitating payment processing for merchant customers engaged in higher-risk activities can pose risks to financial institutions; however, those that properly manage these relationships and risks are neither prohibited nor discouraged from providing payment processing services to customers operating in compliance with applicable law. Statement of Applicability to Institutions With Total Assets Under $1 Billion: This Financial Institution Letter applies to all FDIC-supervised banks and savings associations, including community institutions. |
Highlights:
Continuation of FIL-43-2013 Distribution: Suggested Routing: Note: |
Financial Institution Letters FIL-43-2013 September 27, 2013 |
FDIC Supervisory Approach to Payment Processing Relationships With Merchant Customers That Engage in Higher-Risk Activities The FDIC is issuing this letter to clarify its policy and supervisory approach related to facilitating payment processing 1services directly, or indirectly through a third party, for merchant customers engaged in higher-risk activities. Facilitating payment processing for merchant customers engaged in higher-risk activities can pose risks to financial institutions and requires due diligence and monitoring, as detailed in prior FDIC and interagency guidance and other information. 2Financial institutions that properly manage these relationships and risks are neither prohibited nor discouraged from providing payment processing services to customers operating in compliance with applicable federal and state law. |
Additional Related Topics:
- Guidance for Managing Third-Party Risk, FIL-44-2008;
- Guidance on Payment Processor Relationships, FIL-127-2009;
- Managing Risks in Third-Party Payment Processor Relationships, Supervisory Insights Journal, Summer 2011;
- Payment Processor Relationships, Revised Guidance, FIL-3-2012;
- FFIEC Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual; and
- FFIEC Information Technology Hand book, Retail Payments Systems Booklet.