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Top Story Compliance Related

03/09/2020

OCC proposes revised rules on corporate activities and transactions

The OCC has announced a proposal to amend its rules relating to policies and procedures for corporate activities and transactions involving national banks and federal savings associations. Specifically, the proposal would update and clarify the policies and procedures, eliminate unnecessary requirements consistent with safety and soundness, and make other technical and conforming changes. The proposed rule has a comment period ending on May 4, 2020.

The proposal would, among other changes:

  • Make the definition of “well managed” consistent for all filing types.
  • Eliminate the filing requirement for FSAs that adopt without change the OCC’s model or optional bylaws.
  • Add numerous provisions to 12 CFR 5.33 permitting national banks and FSAs to elect to follow the procedures applicable to state banks or state savings associations, respectively, for certain business combinations.
  • For operating subsidiaries:
    • Permit an eligible operating subsidiary of a qualifying national bank or FSA to engage in an activity that is substantively the same as a previously approved bank or FSA activity, respectively, by filing a notice with the OCC (national banks) or an application through expedited review (FSAs).
    • Remove the annual national bank operating subsidiary reporting requirement.
  • For non-controlling investments by a national bank and pass-through investments by an FSA:
    • With prior OCC approval, permit investments in enterprises that have not agreed to OCC supervision.
    • Provide an expedited review procedure for these investments under certain conditions.
    • Expand the investments eligible for notice.
    • Permit investments without a filing in enterprises conducting activities limited to those previously reported by the national bank or FSA in a previous non-controlling investment or pass-through investment filing.
  • Provide procedures for granting and revoking citizenship and residency waivers for national bank directors.
  • Permit national banks to request approval for a reduction in capital over more than four quarters.
  • Change the definition of “troubled condition” for purposes of changes in directors and senior executive officers to align with OCC supervisory practices. The updated definition would specify that an enforcement action (a cease-and-desist order, consent order, or formal written agreement) must require the national bank or FSA to improve its financial condition for it to be considered in “troubled condition” solely as a result of the enforcement action.

03/09/2020

Comments sought re resolutions plans for large foreign banks

The FDIC and the Federal Reserve Board have invited public comment on proposed changes to the guidance for resolution plans submitted by large foreign banks, including plans that are due by July 1, 2021. The updates focus on the agencies' expectations around a firm's derivatives and trading activities and payment, clearing, and settlement activities. The proposed guidance is largely similar to the guidance from March 2017, and includes certain updates based on the agencies' review of the firms' most recent resolution plans and changes to the resolution planning rules. The proposed guidance also seeks comment on objective, quantitative criteria to determine its applicability. As of the date of the proposal, the firms that meet the proposed criteria are the U.S. operations of Barclays, Credit Suisse, and Deutsche Bank. Comments on this proposal will be accepted for 60 days.

Update: Published at 85 FR 15449 on 3/18/2020, with a 48-day comment period ending 5/5/2020.

03/09/2020

CRA analytics data tables

The Federal Reserve Board has released a series of Community Reinvestment Act Analytics Data Tables. This data resource is intended to provide insight into the historical relationship between bank lending activity and regulatory assessments. The tables combine HMDA data, CRA small business and small farm loan data, and manually extracted data from CRA performance evaluations. Bank attributes, deposit, branching, demographic, and other third-party vendor data supplement the tables.

03/09/2020

OFAC FAQ re COVID-19 in Iran

OFAC has issued a new Frequently Asked Question (FAQ) related to the manner in which humanitarian goods or assistance can be provided to the Iranian people in response to the COVID-19 outbreak in Iran, consistent with the Iran-related sanctions administered by OFAC.

03/06/2020

FDIC voluntary retirement and early separation program

The FDIC has announced it will offer voluntary retirement and early separation opportunities to approximately 20 percent of its employees to help reshape the agency's workforce for the future and to enhance preparedness. A recent report indicated that 42 percent of the FDIC's workforce is eligible for retirement within five years, which could deplete the FDIC's institutional experience and knowledge, especially during a crisis. The voluntary retirement and early separation opportunities are "part of a deliberate strategy to further reduce layers of management, acquire new skillsets, and allow the agency to proactively address succession planning prior to any crisis or emergency situation," said Chairman Jelena McWilliams. "This program will enhance our agility, preparedness, and technological transformation."

03/06/2020

Regulators postpone conference due to coronavirus concerns

The Federal Reserve, FDIC, and OCC have issued a joint press release announcing their decision to postpone the 2020 National Interagency Community Reinvestment Conference (NICRC) scheduled for March 9–12 in Denver after careful consideration of the growing public health concerns associated with the coronavirus (COVID-19). The NICRC planning team is working to confirm a date to reschedule the conference as soon as possible later this year.

03/06/2020

OFAC sanctions Nicaraguan National Police and commissioners

Treasury has announced that OFAC has designated the Nicaraguan National Police (NNP), the primary law enforcement entity in Nicaragua, for its role in serious human rights abuse in Nicaragua. Additionally, OFAC designated three NNP commissioners, Juan Antonio Valle Valle, Luis Alberto Perez Olivas, and Justo Pastor Urbina, for their involvement as senior officials of the Government of Nicaragua and leaders of the NNP. OFAC’s designation is directed at the NNP as an institution responsible for human rights abuses in Nicaragua.

For identification information, see BankersOnline's OFAC Update.

03/06/2020

OCC seeks comments on licencing requirements proposals

Yesterday, the OCC released a proposal for public comment to update and clarify licensing policies and procedures and eliminate unnecessary requirements consistent with safe, sound, and fair operation of the federal banking system.

The proposal would make various changes to the OCC’s Rules, Policies, and Procedures for Corporate Activities, 12 CFR part 5. Among the significant changes being proposed are:

  • permitting national banks and federal savings associations to elect to follow the procedures applicable to state banks or state savings associations, respectively, for certain business combinations.
  • expanding the operating subsidiary notice and expedited review processes to include activities that are substantively the same as activities previously approved by the OCC.
  • permitting non-controlling investments and pass-through investments in entities that have not agreed to OCC supervision, and permitting certain other investments without a filing.
  • providing procedures for granting and revoking citizenship and residency waivers for national bank directors.
  • changing the definition of “troubled condition” for purposes of changes in directors and senior executive officers to specify that an enforcement action must require the national bank or savings association to improve its financial condition for it to be considered in “troubled condition” solely as a result of the enforcement action, which would align with OCC supervisory practice.
  • adding chief risk officer to the list of positions for which a bank in troubled condition must provide notice when making a change in personnel.

UPDATE: Published on April 2, 2020. Comments are due May 4, 2020.

03/06/2020

OCC adds FAQs on third-party relationships

OCC Bulletin 2020-10, issued yesterday, contains updated FAQs to supplement OCC Bulletin 2013-29, “Third-Party Relationships: Risk Management Guidance,” issued October 30, 2013. These FAQs are intended to clarify the OCC’s existing guidance and reflect evolving industry trends.

The new bulletin rescinds OCC Bulletin 2017-21, “Third-Party Relationships: Frequently Asked Questions to Supplement OCC Bulletin 2013-29,” issued on June 7, 2017. The FAQs from Bulletin 2017-21 have been incorporated unchanged into the new bulletin, except for question No. 24, which was updated to reflect current AICPA Service Organization Control report information.

Topics addressed include:

  • the terms “third-party relationship” and “business arrangement.”
  • when cloud computing providers are in a third-party relationship with a bank.
  • when data aggregators are in a third-party relationship with a bank.
  • risk management when the bank has limited negotiating power in contractual arrangements.
  • critical activities and how a bank can determine the risks associated with third-party relationships.
  • bank management’s responsibilities regarding a third party’s subcontractors.
  • reliance on and use of third party-provided reports, certificates of compliance, and independent audits.
  • risk management when third party has limited ability to provide the same level of due diligence-related information as larger or more established third parties.
  • risk management when using a third-party model or when using a third party to assist with model risk management.
  • use of third-party assessment services in managing third-party relationship risks.
  • a board’s approval of contracts.
  • risk management when obtaining alternative data from a third party

03/05/2020

FDIC releases CRA evaluation ratings

The FDIC has issued a list of banks whose evaluation ratings under the Community Reinvestment Act were released in December. Of the 67 banks listed, two received evaluation ratings of Outstanding, 61 received ratings of Satisfactory, three were rated Needs to Improve, and one was said to be in Substantial Noncompliance. The two banks with Outstanding ratings were:

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