CompliSolv’s AI-Enhanced Preemption Review Offers Game-Changing Insights

Power of Preemption. With state financial regulators and attorneys general redoubling their supervision and enforcement efforts, the patchwork of duplicative and daunting state laws in today's regulatory landscape has increasingly become a compliance minefield. Preemption, the legal doctrine by which federal law supersedes conflicting state requirements, offers a powerful but underutilized tool for federally chartered banks navigating this complexity.

Increased Opportunity. The Office of the Comptroller of the Currency (OCC) has displayed a willingness to push the envelope for preemption, even engaging in preemption rulemaking and determinations during the pendency of federal litigation, like it recently did in the case of the Illinois credit card swipe fee law. A successful preemption argument means a bank can disregard a conflicting state law altogether, trading a fragmented, state-by-state compliance burden for the clarity and consistency of a single federal standard. With federal regulatory backing, federally chartered banks (and banks aspiring to become federally chartered) have much to gain from a well-developed preemption strategy.

CompliSolv’s Preemption Analysis. Helping banks take advantage of this preemption momentum, CompliSolv delivers an AI-enhanced, expert-backed preemption analysis engine. In a first-of-its-kind program, the CompliSolv platform utilizes a blending of subject matter expertise and AI to analyze state compliance requirements for preemption likelihood. The CompliSolv approach reviews each compliance requirement and categorizes the requirement based on the likelihood of the state law requirement being preempted by the National Bank Act, the Home Owners' Loan Act, or regulations promulgated by the OCC.

Efficiency. The likelihood of preemption for each state law requirement is identified and clearly communicated through the CompliSolv tool. These characterizations can allow federally chartered banks to quickly determine that they can ignore certain onerous laws. Likewise, for institutions considering whether to become federally chartered, the tool can save hundreds of hours of expert analysis, allowing the bank's key advisors to focus on the most important nuances of this decision.

Subject Matter Expert Accessibility. Most importantly, the experts behind CompliSolv are always available to assist with the more complex aspects of any preemption-related issue. Even where CompliSolv has revealed that a state law requirement is highly likely to be preempted, the analysis does not stop there. Through CompliSolv, banks have access to a deep bench of subject matter experts, including former OCC enforcement counsel and seasoned trial attorneys, who work with compliance teams to review the details of their products and services, along with the intricacies of a state law's requirements. With the platform's support, banks can quickly determine whether the state law requirement is preempted, then analyze the legal, reputational, and strategic considerations that might advise either in favor of, or against, asserting federal preemption.

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