BPI and TCH Respond to Financial Stability Board’s Payments Consultation

To the Secretariat to the Financial Stability Board:

The Clearing House Association L.L.C. ("TCH")^[1] and the Bank Policy Institute ("BPI")^[2] (together, the "Associations") submit this comment letter to the Financial Stability Board ("FSB") in response to the Recommendations for Regulating Supervising Bank and Non-bank Payment Service Providers Offering Cross-border Payment Services Consultation Report ("Report"). As requested in the Report, TCH has submitted responses to various questions for consultation included in the Report through the secure online form provided by the FSB. In addition to those responses, we are submitting this letter to provide additional comments and information regarding the provision of cross-border payment services by bank and non-bank payment service providers ("PSPs"). The Associations appreciate the opportunity to provide comments on the Report.

Introduction

On July 16, 2024, the FSB published the Report as a next step in furtherance of the FSB's G20 Roadmap for Enhancing Cross-border Payments: Priority actions for achieving the G20 targets. Generally, the Report sets out proposed policy recommendations intended to strengthen consistency in the regulation and supervision of banks and non-banks in their provision of cross-border payment services in a way that is proportionate to the risks associated with such activities. The objective of the Report is to recommend measures to create a regulatory environment that facilitates reduced costs, increases delivery speed and improves financial access and transparency by establishing a level playing field for bank and non-bank PSPs to the extent possible given differences in business models and risk profiles. The Report focuses on inconsistencies in regulation in areas such as consumer protection, licensing, anti-money laundering/countering the financing of terrorism, operations, data protection and privacy.

The Report accurately describes the commercial environment for retail cross-border payments and correctly identifies many of the regulatory risks and frictions associated with the provision of cross-border payment services. The Report also reasonably portrays some of the inconsistencies in the supervision and regulation of bank and non-bank PSPs within and across jurisdictions. However, as discussed below, there are a few other regulatory frictions that the Report fails to address and that the FSB should consider in developing its recommendations regarding the regulation and supervision of retail cross-border payments. Most significantly, we strongly encourage the FSB to consider the impact of sanctions screening obligations on the speed and processing of cross-border transactions.

To read the full comment letter, please click here, or click on the download button below.

[1] The Clearing House Association L.L.C., the oldest banking trade association in the United States, is a nonpartisan organization that provides informed advocacy and thought leadership on critical payments-related issues. Its sister company, The Clearing House Payments Company L.L.C., owns and operates core payments system infrastructure in the United States, clearing and settling more than $2 trillion each day. See The Clearing House's website at www.theclearinghouse.org.

[2] 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.