Guidelines for Evaluating Account and Services Requests, 68691-68692 [2022-24929]

Agencies

• FEDERAL RESERVE SYSTEM

[Federal Register Volume 87, Number 220 (Wednesday, November 16, 2022)]
[Notices]
[Pages 68691-68692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24929]


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FEDERAL RESERVE SYSTEM

[Docket No. OP-1788]


Guidelines for Evaluating Account and Services Requests

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice and request for comment.

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SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
is issuing a request for comment on proposed amendments to its 
Guidelines for Evaluating Account and Services Requests (Account Access 
Guidelines or Guidelines) that would require the Federal Reserve Banks 
(Reserve Banks) to publish a periodic list of depository institutions 
with access to Reserve Bank accounts and/or financial services.

DATE:  Comments must be received on or before January 17, 2023.

FOR FURTHER INFORMATION CONTACT: Jason Hinkle, Deputy Associate 
Director (202-912-7805), Division of Reserve Bank Operations and 
Payment Systems, or Gavin Smith, Senior Counsel (202-452-3474), Legal 
Division, Board of Governors of the Federal Reserve System. For users 
of TTY-TRS, please call 711 from any telephone, anywhere in the United 
States.

ADDRESSES: You may submit comments, identified by Docket No. OP-1788, 
by any of the following methods:
    Agency website: https://www.federalreserve.gov. Follow the 
instructions for submitting comments at https://www.federalreserve.gov/apps/foia/proposedregs.aspx.
    Email: [email protected]. Include the docket number 
in the subject line of the message.
    FAX: (202) 452-3102.
    Mail: Ann E. Misback, Secretary, Board of Governors of the Federal 
Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 
20551.
    All public comments are available from the Board's website at 
https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as 
submitted, and will not be modified to remove confidential, contact or 
any identifiable information. Public comments may also be viewed in-
person in Room M-4365A, 2001 C St. NW, Washington, DC 20551, between 
9:00 a.m. and 5:00 p.m. during Federal business weekdays.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 15, 2022, the Board adopted final Account Access 
Guidelines that establish a transparent, risk-based, and consistent set 
of factors for Reserve Banks to use in reviewing requests from 
depository institutions to access Federal Reserve Bank accounts and/or 
financial services (accounts and services).\1\ \2\ \3\ The final 
Guidelines provide a process to evaluate requests for accounts and 
services (access requests) in order to support a safe, inclusive, and 
innovative payment system. The final Guidelines also include a tiered 
review framework to provide additional clarity on the level of due 
diligence and scrutiny that Reserve Banks will apply when reviewing 
access requests from different types of institutions.
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    \1\ 87 FR 51099 (Aug. 19, 2022).
    \2\ Information on the Federal Reserve Banks' financial 
services, including a list of such services, can be found at https://www.frbservices.org/.
    \3\ The Guidelines do not apply to accounts provided under 
fiscal agency authority or to accounts authorized pursuant to the 
Board's Regulation N (12 CFR 214), joint account requests, or 
account requests from designated financial market utilities, since 
existing rules or policies already set out the considerations 
involved in granting these types of accounts.
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    The longstanding practice of both the Board and the Reserve Banks 
has been to not disclose account-related information to the general 
public on the basis that such information is considered confidential 
business information.\4\ However, the development and publication of 
the Account Access Guidelines prompted the Board to consider the 
potential benefits of expanding the disclosure of the names of 
institutions that have access to accounts and services. For example, 
the Board received comments and inquiries from a range of stakeholders 
calling for greater public disclosure of account-related information.
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    \4\ See the preamble to the Federal Register notice adopting the 
final Account Access Guidelines for further discussion of this 
practice. The preamble notes that institutions may choose to self-
disclose their access to accounts and services. 87 FR 51099-51102 
(Aug. 19, 2022).
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    As a result, the Board has decided to reevaluate the Federal 
Reserve's current disclosure practices and to propose an account 
disclosure process that would balance the relevant benefits and risks.

II. Discussion

    The Board considered a range of benefits, risks, and other factors 
in developing the proposal. On the one hand, some information that 
Reserve Banks use to evaluate access requests clearly is confidential, 
such as trade secrets, private personal information, or confidential 
supervisory information submitted in connection with an access request. 
In addition, the Board acknowledges that institutions could face the 
risk of reputational harm if they are denied access to accounts and 
services, even if the denial is due to a Reserve Bank's evaluation of 
information that is publicly available (e.g., information about an 
institution's business model). The Board believes that, to the greatest 
extent possible, the Account Access Guidelines should not discourage 
institutions from requesting access to accounts and services by 
subjecting requestors to the potential disclosure of confidential 
information or risk of reputational harm.
    At the same time, some institutions may not consider the fact that 
they have access to accounts and services to be confidential business 
information. Many institutions self-disclose such information, and 
certain types of institutions generally have access to accounts and 
services (e.g., federally-insured depository institutions). Moreover, 
Reserve Banks currently provide disclosure of the identity of account 
holders to financial institutions and other authorized users of the E-
Payments Routing Directory. Subject to the directory's terms and 
conditions, authorized users can search for an institution by name, 
routing number, city, or state and to determine whether the institution 
uses the Fedwire[supreg] Funds Service (which requires a master

[[Page 68692]]

account), the Fedwire Securities Service, and/or FedACH[supreg].\5\
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    \5\ See https://www.frbservices.org/resources/routing-number-directory.
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    In balancing these factors, the Board believes that the names of 
institutions with access to accounts and services could be disclosed in 
a more accessible, transparent way to the general public without 
causing harm to these institutions or the Federal Reserve. The Board 
therefore proposes to establish a requirement for Reserve Banks to 
periodically publish a consolidated list of depository institutions 
with access to accounts and services (whether the institution settles 
its transactions directly in its own master account or settles its 
transactions in its correspondent institution's master account).\6\ 
This proposal would greatly expand public access to key account- and 
service-related information. The Board proposes to establish this 
requirement by adding a new section 3 to the Account Access Guidelines 
entitled ``Public Disclosure.''
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    \6\ The Board discussed two options for the method of disclosing 
accounts and services information to the general public: (1) an 
online, searchable database and (2) a sortable list posted to a 
public website operated by the Federal Reserve System (either the 
Federal Reserve Banks or the Board). Analysis concluded that, on 
balance, an online, searchable database would offer a slightly 
easier method for the public to determine if a specific depository 
institution has access to a Reserve Bank account and/or services. 
However, the Board estimated that constructing an online searchable 
database that provides validated data in a secured platform would 
likely have a longer time to launch than producing a sortable list 
published on our public website. As a result, the proposal 
recommends the publication of a sortable list posted to a Federal 
Reserve public website in the near term while continuing to research 
the technical requirements of an online, searchable database.
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    The key features of the proposed requirement would be:
    (1) On a quarterly basis, the Reserve Banks would produce a single, 
Federal Reserve System-wide report with two lists: (1) a list of 
federally-insured depository institutions with access to accounts and 
services, and (2) a list of non-federally-insured depository 
institutions with access to accounts and services. The report would be 
posted to a Federal Reserve System public website shortly after the end 
of the quarter. The quarterly cadence would be intended to balance 
providing timely public transparency with reducing potential 
reputational harm to institutions that have had their access to 
accounts and services removed since the previous report.
    (2) The report would include two data elements for each institution 
with access to accounts and services: (1) institution name, and (2) the 
Reserve Bank district in which the institution is located.
    (3) In a separate section, the report also would identify (1) the 
institutions that have received access to accounts and services since 
the publication of the previous report, and (2) the institutions that 
no longer have access to accounts and services since the publication of 
the previous report.\7\
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    \7\ The list of depository institutions that no longer have 
access to accounts and/or services would include both institutions 
that lost access to accounts and services and those that gave up 
their access to accounts and services voluntarily.
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III. Request for Comment

    The Board requests comment on all aspects of the proposed new 
Public Disclosure section of the Account Access Guidelines. In 
particular, the Board requests comment on the following questions:
    1. Would the two data elements in the proposed Public Disclosure 
section appropriately balance providing public transparency with 
protecting information that institutions consider to be confidential?
    2. Would the proposed publication schedule (quarterly cadence) 
appropriately balance providing timely transparency with reducing 
potential reputational harm to institutions that no longer have access 
to accounts and services? Would a less frequent cadence, such as semi-
annual publication, strike that balance more effectively?
    3. Are there additional data elements for each institution with 
access to accounts and services that the Federal Reserve should 
consider publishing to provide greater transparency to the public (such 
as the date on which access was provided, to extent known, or removed, 
location of the institution, etc.)? Are there additional data elements 
that the Federal Reserve should avoid publishing to prevent potential 
harm to these depository institutions?
    4. Are there additional actions that the Board or Reserve Banks 
should take to provide transparency with respect to accounts and 
services? For example, should the Board establish a requirement for the 
Reserve Banks to publish a list of institutions that have requested an 
account or access to services (including the date on which the request 
was submitted, rejected, or withdrawn, etc.)?
    5. Should categories of private sector institutions with access to 
accounts and services that are not covered by the Guidelines, such as 
designated financial market utilities, be scoped into the proposed 
Public Disclosure section?

IV. Account Access Guidelines--Proposed Section 3

Guidelines Covering Access to Accounts and Services at Federal Reserve 
Banks (Account Access Guidelines)

Section 3: Public Disclosure
    The Board expects the Reserve Banks, working together, to produce a 
single, quarterly Federal Reserve System-wide report with two lists: 
(1) a list of federally-insured depository institutions with access to 
accounts and/or services, and (2) a list of non-federally-insured 
depository institutions with access to accounts and/or services.\8\ 
This report should be posted to a Federal Reserve System public website 
with a short time lag after the end of each quarter. The report should 
include two data elements: (1) institution name, and (2) the Reserve 
Bank district in which the institution is located. In addition, the 
report should identify (1) the institutions that have received access 
to accounts and/or services since the publication of the previous 
report, and (2) the institutions that no longer have access accounts 
and/or services since the publication of the previous report.
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    \8\ The proposed list would include all institutions that access 
Reserve Bank priced financial services directly via a master account 
and those that access services indirectly via a master account of 
its correspondent bank.

    By order of the Board of Governors of the Federal Reserve 
System.
Ann Misback,
Secretary of the Board.
[FR Doc. 2022-24929 Filed 11-15-22; 8:45 am]
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