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U.S. federal regulators have indicated that they may require financial technology-centric firms, or fintechs, and other emerging non-bank financial companies to show they have a full suite of anti-money laundering controls in place before providing them accounts and services.

Amid a spike in recently chartered fintechs and other “novel institutions,” the Board of Governors of the Federal Reserve System sought feedback Tuesday on the proposed AML program requirements and five other possible criteria to use when reviewing the companies’ applications for “master” accounts at one of the central bank’s 12 affiliates, or reserve banks.

The criteria, according to the Fed, would help protect the U.S. financial system and electronic payments infrastructure from any risk that may arise from a fintech or other novel institution who successfully applies for a master account.

“With technology driving rapid change in the payments landscape, the [proposal] … would ensure requests for access to the Federal Reserve payments system from novel institutions are evaluated in a consistent and transparent manner,” Federal Reserve Governor Lael Brainard said upon submitting a draft of the proposal last week.

The proposal would task the 12 reserve banks with determining whether an applicant in their region conducts any business that may “impede” compliance with the Bank Secrecy Act, U.S. sanctions and consumer protection standards before approving the company’s eligibility for a master account, which banks typically use to settle electronic payments with one another and safeguard assets.

“The reserve bank should confirm that the institution has an anti-money-laundering program consistent with the requirements … and complies with the Office of Foreign Asset Control (OFAC) regulations,” officials proposed.

Regional officials would also review any prior state or federal assessment of the institution’s potential exposure to cyberattacks, credit defaults and other risks.

Applying institutions’ compliance programs would have to possess the full spectrum of anti-financial crime controls, including written risk assessments, transaction-monitoring and client due-diligence systems, independent testing and auditing and ongoing training, as well as a commitment by senior managers to ensure their effectiveness, according to the notice.

If finalized, the proposed framework would increase pressure on fintechs and other non-bank financial companies to step up their compliance controls, said Dan Stipano, a former senior official with the Office of the Comptroller of the Currency, or OCC.

“It seems clear that compliance with AML requirements will be an important factor in the Fed’s decision-making process [for opening accounts],” Stipano, now a partner at Davis Polk & Wardwell in Washington, D.C., wrote in an email.

A number of fintechs have received interim or final approval over the past year to take deposits and engage in certain forms of lending under various charters from the Federal Reserve, OCC, or Federal Deposit Insurance Corp.

They include Varo, a San Francisco-based mobile provider of financial services, Protego, a Seattle-based cryptocurrency firm, and Square, an online commercial bank in Salt Lake City. ACAMS moneylaundering.com could not confirm by press time whether any of the three had obtained master accounts.

Tuesday’s proposal would protect reserve banks’ authority to approve or withhold master accounts in their regions, and, by implementing uniform guidelines for all of them, discourage fintechs and other novel institutions from “forum shopping,” the Board of Governors claimed.

Reserve bank officials would have to follow the guidelines primarily in evaluating new applications, but could also incorporate them in reviews of existing relationships in which the master account holder’s commercial behavior and exposure to risk suddenly change.

Contact Valentina Pasquali at vpasquali@acams.org