Notice of Proposed Rulemaking: Permitted Payment Stablecoin Issuer Customer Identification Program

Summary:

The FDIC, along with the Board of Governors of the Federal Reserve System (Board), the Office of the Comptroller of the Currency (OCC), the National Credit Union Administration (NCUA), and the Financial Crimes Enforcement Network (FinCEN), approved a notice of proposed rulemaking (NPR) that would implement the directives pursuant to the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act to treat permitted payment stablecoin issuers (PPSIs) as financial institutions under the Bank Secrecy Act and to require PPSIs to maintain an effective customer identification program (CIP).

Statement of Applicability: The contents of, and material referenced in, this FIL apply to all FDIC-supervised financial institutions.

Highlights:

• Consistent with CIP obligations for other types of financial institutions, the NPR would establish the minimum standards for a PPSI's CIP, including developing a written program tailored to the PPSI's size and business, risk-based procedures for verifying the identity of each customer, and procedures to address when a potential or existing customer's identity cannot be verified.
• Because FDIC-supervised PPSIs will be subsidiaries of parent insured depository institutions (IDIs) with CIP requirements, a PPSI and its parent IDI would generally be able to coordinate compliance practices and share compliance resources. The PPSI, as part of the institution as a whole, would be permitted to leverage the parent's CIP program, so long as the comprehensive program is reasonably designed to identify and mitigate the risks posed by the different aspects of each entity's business and activities and satisfies each of the requirements to which the PPSI and parent are subject.
• Under the NPR, the PPSI would also be permitted to develop procedures specifying when the PPSI may rely on another federally regulated financial institution's performance of the CIP procedures for the PPSI's customer. Such reliance would be permissible if three requirements are met: (1) the reliance is reasonable under the circumstances, (2) the other financial institution is subject to an AML/CFT program with CIP requirements and regulated by a Federal functional regulator, and (3) the other financial institution has a contractual obligation to annually certify to the PPSI that it has implemented an AML/CFT program and will perform (or its agent will perform) the specified requirements of the PPSI's CIP.
• Comments on the NPR will be accepted for 60 days after publication in the Federal Register.