We are struggling to get financial documentation for several existing vendors that are privately-held and we have rated as high risk. Even when we state that this is a FFIEC/FDIC regulatory requirement for us, they still say no. How are other banks handling this? How is your bank getting comfort on a vendor’s financial health if no financial information is provided for review?

Do you have a clause in your MSA or Agreement with the vendor that requires them to provide financials? If you do, withhold payment or use any means allowed by your agreement. If not and it's an existing vendor, there isn't much you can do legally.

Prior to revamping our vendor onboarding we reached out to a few legacy vendors and let them know that we would be requiring financials with a revised MSA when their current agreement expires. Any vendor that didn't agree well in advance of their agreement expiration, we made plans to replace and submitted official notice that we were opting out of any future renewals. All but one provided financials within thirty days.

Also, welcome to BOL.

Most of ours while private and don't provide specific financials, they are used to getting asked this question so they will provide a financial overview knowing they will be asked by many and that has been sufficient thus far.

You have "high risk" vendors that will not share financial information? Then they should not be vendors of yours. If you have no idea if they are going to be here tomorrow - you have no business using them. You are sure they are "high risk"?

A couple of these vendors provide a "Letter of Financial Condition", which is biased and lacks detail. They can really say whatever they want on the letter and we don't have a way to verify its legitimacy. We've been pushing for financials as part of our contract negotiation process on new vendors, but tend to get heavy push back when they are private.

Yes, these are existing high risk vendors that are privately-held. We are trying to get this area cleaned up since we push for financials as part of new contracts. For these existing relationships, what do you recommend?

Give them an ultimatum. Provide the information or lose the contract. Better for you to do it before the regulators force your hand. I am sure they are probably starting to lose other financial institution clients for the same reason, which means their financial position is likely deteriorating. Making a decision to move to another vendor in an orderly basis is going to be much preferred to one day when they just stop answering their phones.

I just find it hard to imagine in this day and age what services these "high risk" private vendors would be providing that do not know all about the expected vendor due diligence expectations.