Federal Register #Docket No. R-1891

Proposed Amendments to Regulation J for FedNow Service Intermediaries

The Board of Governors of the Federal Reserve System is proposing regulatory amendments to enhance the FedNow Service: - The proposed rule would allow FedNow participants to use intermediary banks (such as correspondent banks) in addition to Reserve Banks for sending funds transfers through the FedNow Service - This change supports private-sector cross-border payment solutions by enabling intermediaries for the international portion of transactions, while FedNow handles the U.S. domestic portion - The proposal aligns FedNow with the Fedwire Funds Service, which already permits intermediaries - No specific OEMs, vendors, products, or services are being procured - Notable requirements include maintaining immediate funds-availability for domestic transfers and clarifying the use of intermediary banks in payment orders - The rule affects all depository institutions participating in FedNow, including approximately 7,040 small entities with assets under $850 million - The Board of Governors of the Federal Reserve System is the government entity responsible for this regulatory change

Description

The Board of Governors of the Federal Reserve System is proposing amendments to subpart C of Regulation J to allow FedNow participants to use intermediaries other than Reserve Banks for funds transfers through the FedNow Service. This change aims to support private-sector cross-border payment solutions by enabling participants to leverage intermediaries, such as correspondent banks, for the international portion of cross-border transactions while using the FedNow Service for the U.S. domestic portion. The proposal aligns the FedNow Service with the Fedwire Funds Service and does not create new money laundering or payment system integrity risks. Comments on the proposed rule are due by June 9, 2026.

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