Center for FinTech Information
Earlier this month Director Charlie Clark announced the launch of DFI’s Center for FinTech Information (CFI). The CFI was created to facilitate communication between DFI and entrepreneurs, start-ups, and fintech companies. Along with the CFI, DFI has also created a comprehensive new site, www.dfi.wa.gov/fintech, to provide tools and guidance for new businesses wishing to enter the space of financial services.
The CFI site and staff aims to provide information about doing business in Washington as a regulated entity under DFI’s financial laws, rules, and regulations, including those related to money transmission, lending, securities, and banking. A major function of the CFI will be to review business concepts or plans to assist a new business in identifying the potential business activities that may be regulated by DFI. The CFI can be reached through a dedicated email address: FinTechInfo@dfi.wa.gov.
Currently, as the site is new, most information available relates to business models involving virtual currency; however, DFI is in the process of adding new guidance relating to other areas of interest, like partnerships between depository institutions and non-depository businesses. The site includes guidance issued by CS under the Consumer Loan Act (CLA), chapter 31.04 RCW, and will soon include guidance under the Uniform Money Services Act, chapter 19.230 RCW, relating to partnerships between depository financial institutions and fintech partners.
The current guidance under the CLA addresses depository financial institution and fintech partner relationships for businesses wishing to partner with a depository financial institution to offer loan products to Washington consumers. See Guidance 2021-1. The guidance lays out the criteria that CS will review to determine if the fintech partner is exempt from the Consumer Loan Act for activities conducted in partnership with the depository financial institution. The criteria are:
- The depository funds and disburses the loan from the depository’s own account.
- All loan contracts, consumer disclosures, and legal documentation with the borrower, identify the depository as the lender.
- All marketing materials and advertising across all mediums clearly identify the depository as the lender.
- The depository maintains ultimate authority to set the terms of the loan, including interest rate, borrower fees, and criteria used to evaluate prospective borrowers.
- The depository is ultimately responsible for compliance with applicable laws and regulations, including Bank Secrecy Act/Anti-Money Laundering requirements.
The guidance also makes a distinction between consumer lending, consumer “servicing”, mortgage lending, mortgage servicing, and student education loan servicing. Mortgage and student education loan servicing activity requires a license under the Consumer Loan Act, regardless of whether the partnership criteria listed above is met.