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Top Story Compliance Related

04/02/2020

OCC CRA evaluations released

The OCC has released a list of Community Reinvestment Act performance evaluations that were made public in March.. Of the 28 evaluations made public this month, 22 were rated satisfactory and the following six were rated outstanding (links are to the evaluation reports):

04/02/2020

OCC publishes March proposal to amend licensing rules

The OCC has published at 85 FR 18728 its March 2020 proposal (see our Top Story) to amend its rules relating to policies and procedures for corporate activities and transactions involving national banks and Federal savings associations to update and clarify the policies and procedures, eliminate unnecessary requirements consistent with safety and soundness, and make other technical and conforming changes. Comments will be accepted through May 4, 2020.

04/01/2020

FATF reports on U.S. progress in tackling ML

The Financial Action Task Force has issued a report on the United States' progress in strengthening measures to tackle money laundering and terrorist financing.

The United States has been in an enhanced follow-up process following the adoption of its mutual evaluation in 2016. In line with the FATF Procedures for mutual evaluations, the country has reported back to the FATF on the actions it has taken since then. To reflect the United States' progress, the FATF has changed its rating of the country on Recommendation 10 (Customer Due Diligence) from Partially Compliant to Largely Compliant

The report also looks at whether the United States' measures meet the requirements of FATF Recommendations that have changed since the 2016 mutual evaluation. The FATF agreed to maintain the rating of Compliant for Recommendation 2 (National cooperation and coordination), Recommendation 5 (Terrorist financing offense) and Recommendation 21 (Tipping-off and confidentiality). The FATF also maintained the rating of Largely Compliant for Recommendation 7 (Targeted financial sanctions related to proliferation), Recommendation 8 (Non-profit organizations) Recommendation 15 (New technologies) and Recommendation 18 (Internal controls and foreign branches and subsidiaries).

The United States is now compliant on 9 of the 40 Recommendations and largely compliant on 22 of them. It remains partially compliant on 5 of the 40 Recommendations and not compliant on 4 of them. The United States remains in enhanced follow-up and will report back to the FATF on progress to strengthen its implementation of Anti-Money Laundering / Countering the Financing of Terrorism measures.

04/01/2020

Regulators clarify five year-transition rule and CECL Rule

FDIC FIL-32-2020, issued yesterday, delivered a joint statement by the Fed, FDIC, and OCC to clarify the interaction between the interim final rule that provides a five-year transition period for the impact of the current expected credit loss methodology (CECL) on regulatory capital and the temporary CECL relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

On March 27, 2020, the agencies issued an interim final rule that provides banking organizations that were required (as of January 1, 2020) to adopt CECL during the 2020 calendar year an option to delay an estimate of CECL's impact on regulatory capital. Also, on March 27, 2020, the CARES Act was signed into law. The CARES Act provides banking organizations optional temporary relief from complying with CECL. The joint statement clarifies the interaction between the CECL IFR and the CARES Act for purposes of regulatory capital requirements.

04/01/2020

More tax and reporting deadlines delayed

Treasury has announced it is delaying tax payment due dates for wine, beer, distilled spirits, tobacco products, firearms, and ammunition excise taxes, to provide flexibility for businesses that have been negatively affected by COVID-19. The postponement of due dates applies to any tax payment or operational report with an original due date falling on or after March 1, 2020, through July 1, 2020. Interest and penalties will not apply when payments are made within 90 days of the original due date. Treasury's Alcohol and Tobacco Tax and Trade Bureau (TTB) will re-evaluate the terms of this immediate relief as circumstances warrant.

04/01/2020

Fed Board delays revised control framework

The Federal Reserve Board has announced it will delay by six months the effective date for its revised control framework, to reduce operational burden and allow institutions to focus on current economic conditions.

In January, the Board finalized a revised framework (see our 1/31/2020 Top Story) that simplifies and increases the transparency of its rules for determining when one company controls another company for purposes of the Bank Holding Company Act and Home Owners' Loan Act. If a company has control over a banking organization, the company generally becomes subject to the Board's rules and regulations. The six-month delay will move the effective date to September 30, from the original date of April 1. No changes were made to the framework itself.

UPDATE: Notice published in the Federal Register for April 2, 2020.

03/31/2020

Regulators adjust calculation for credit concentration

The FDIC has issued FIL-31-2020 announcing that the FDIC, Federal Reserve, and OCC are jointly adjusting their calculation for credit concentration ratios used in the supervisory process. The adjustment is in response to changes in the capital information available after the implementation of the Community Bank Leverage Ratio (CBLR) rule.

Effective March 31, 2020, for supervisory purposes, examiners will calculate credit concentration ratios using tier 1 capital plus the appropriate allowance for loan and lease losses or the allowance for credit losses attributed to loans and leases (as applicable) for the denominator.

03/31/2020

FDIC proposes rule for parent banks of industrial banks

The FDIC has published at 85 FR 17771 in today's Federal Register a notice of proposed rulemaking and request for comment. The agency is seeking comment on a proposed rule that would require certain conditions and commitments for each deposit insurance application approval, non-objection to a change in control notice, and merger application approval that would result in an insured industrial bank or industrial loan company becoming, after the effective date of any final rule, a subsidiary of a company that is not subject to consolidated supervision by the Federal Reserve Board.

The proposed rule also would require that before any industrial bank or industrial loan company may become a subsidiary of a company that is not subject to consolidated supervision by the Federal Reserve Board, such company and the industrial bank or industrial loan company must enter into one or more written agreements with the Federal Deposit Insurance Corporation.

Comments on the proposal will be accepted through June 1, 2020.

UPDATE: On May 27, 2020, the FDIC published a notice it has extended the comment period on this proposal to end July 1, 2020.

03/30/2020

FDIC updates steps to protect banks and continue operations

FDIC FIL-29-2020, issued Friday, updates the steps announced on March 16, 2020, to protect banks and consumers and to continue operations. Highlights:

  • All FDIC employees in all FDIC facilities are now engaged in mandatory telework through at least April 12.
  • Supervisory and other FDIC activities at financial institutions will be conducted off-site for an additional two weeks through April 12, and staff has individually contacted institutions with ongoing or upcoming examination activities about their communication preferences during this period.
  • The FDIC will evaluate the necessity of continuing off-site work as we approach April 12.
  • The FDIC recognizes that institutions may have operational or staffing challenges associated with the pandemic that limit the ability of management to respond to normal supervisory requests. Institutions faced with these challenges should contact their Examiner-in-Charge or Regional Director to coordinate the timing of any response so it does not inhibit critical operations at the institution at this difficult time.
  • Despite the challenges presented by the coronavirus, the FDIC remains prepared to carry out its mission to insure deposits, promote financial stability, protect consumers, and ensure the safe and sound operation of FDIC-supervised institutions.

03/30/2020

FDIC to accept annual reports delayed by COVID-19

The FDIC has issued FIL-30-2020 to provide additional information and guidance to insured depository institutions (IDIs) subject to Part 363 of the FDIC's regulations that have been affected by COVID-19. Highlights of the statement: As noted in the statement, the FDIC:

  • Recognizes that an IDI may not be able to file its Part 363 Annual Report in a timely manner due to the effects of COVID-19.
  • Provides that the FDIC will not take supervisory action against any IDI for submitting its Part 363 Annual Report or its written notification of late filing as long as the annual report or notification of late filing is submitted within 45 days of the 90- or 120-day report filing deadline.
  • Encourages IDIs to contact the FDIC in advance of the official filing date if the IDI anticipates a delayed submission.
  • Affirms that the staff of the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the state banking regulators have confirmed the FDIC's treatment of the annual report required by Part 363.

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