The American Bankers Association said today that it supports a proposal to allow banks and credit unions to use intermediaries to send transfers through the FedNow payments service, as long as certain safeguards are taken.
FedNow participants are currently not allowed to use intermediaries other than Reserve Banks, which prevents U.S. banks from using the service to send payments to banks outside the country. The Federal Reserve has proposed to amend its regulations to allow the use of intermediaries that are not Reserve Banks.
In a letter, ABA said it generally supports responsible efforts by the Fed to enhance FedNow and its usefulness for the broader banking system. However, the association added that “any expansion of permissible access models must be accompanied by clearly articulated regulatory safeguards.”
ABA recommended the Fed establish a clear safe harbor prioritizing sanctions compliance and financial integrity over immediate funds availability, where appropriate. It also recommended that the Fed clarify that only fully chartered and prudentially supervised depository institutions with full, direct master account access may serve as the originator and the intermediary for FedNow transactions in the U.S.
“Institutions’ ability to meet these requirements immediately will vary based on their resources and operational capabilities, and the [Fed] Board should account for that variation,” ABA said. “We urge the Board to adopt the proposed amendments only with clear limits requiring that intermediaries in these transactions be fully regulated depository institutions with direct master account access.”
