Ian P. Moloney, Senior Vice President and Head of Policy and Regulatory Affairs at AFC, has issued a statement regarding the FDIC’s proposed rulemaking on custodial deposit accounts with transaction features.
"We appreciate the FDIC’s initiative, and while it may be well-intentioned, the proposed rulemaking is not necessary as financial institutions, including AFC members, have already established clear deposit account ledger processes for the funds they have custody of as part of a bank-fintech partnership that allows prompt payment of deposits," Moloney stated.
Moloney emphasized that despite recent enforcement actions casting a shadow on some partnerships, bank-fintech collaborations remain an effective mechanism for delivering safe and responsible digital-first products and services. He highlighted their importance to consumers historically underserved by the financial services industry. "The consumer demand, and the industry best practice that has been developed – though often overlooked – demonstrates that the partnership model fosters innovation, enhances financial inclusion, and delivers significant benefits to individual consumers when properly and responsibly managed," he said.
Moloney called for new standards informed by interdisciplinary dialogue rather than additional regulatory burdens to address specific issues identified by the agency. "We need a fresh set of standards informed by interdisciplinary dialogue and the lessons we have learned from past successes and challenges," he added.
He expressed optimism about existing industry-led approaches in collaboration with regulators as the most effective way to restore confidence in these partnerships. "By focusing on refining existing structures and implementing best practices, we can ensure the long-term viability and safety of custodial accounts without stifling innovation," Moloney remarked.
Concluding his statement, Moloney reaffirmed AFC's commitment to working with the FDIC to achieve balanced outcomes that protect consumers, foster innovation, and maintain financial stability. "On this and every other issue, AFC remains committed to working with the FDIC to achieve balanced outcomes that protect consumers, foster innovation, and maintain financial stability."