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New regulations could affect short-term lenders and collectors

Dec 28, 2012 Philip Burgess

The United States Treasury Department is considering new laws which will be enforced under its Financial Crimes Enforcement Network (FinCEN) targeting transnational crime. These new regulations would attempt to curb money laundering for international organizations, and this may have an impact on prepaid cards and other short term lending, as a review of current policies could shift practices. Further, the Federal Deposit Insurance Company (FDIC) is examining its policies when it comes to mobile payments, including recurring payments in digital environments. This could impact debt collectors who have implemented online payments and billing. Issues of consumer privacy and fair representation are at stake in these cases, and lenders and collectors should pay attention to developments and consider modifying policies for compliance.

FinCEN
The U.S.. Treasury is working with the Homeland Security Department to curb transnational crime and terrorism by targeting funds that could be a front for outlaw groups. Prepaid debit cards could be affected by these new policies, because they contain the ability to be loaded with large amounts of money. New regulations would require individuals to declare any amount held on prepaid cards over $10,000. The would help customs better monitor the flow of money as it relates to tourism. Further, federal agents will try to weed out companies that may be based in illegitimate operations, which ultimately bodes well for short term lenders, as the result might boost consumer confidence in lines of alternative credit by brightening the profile of the industry. Establishing a new policy might also open the doors to further, more specific regulations on the lenders, so this development is important toconsider as business plans are established for 2013.

FDIC
When it comes to new technology such as mobile payments, federal lawmakers and the FDIC are concerned about financial institutions losing revenue. Further concerns involve consumer privacy and legal compliance. There may be implications when it comes to online payments, which could affect lenders and collectors. The digital age has caused these industries to expand the methods through which debts can be repaid. Issues of data security are at stake, and institutions handling private consumer credit data should take steps to ensure that all standards are met. Best practices for compliance are constantly evolving, and it's crucial that lenders and collectors alike stay updated on the latest regulations. It is likely that 2013 will bring increased attention to electronic environments for lawmakers, and as requirements change, business policies must follow suit.