OCC eases community bank data collection, BSA exam requirements

The Office of the Comptroller of the Currency announced Nov. 24 that it is eliminating annual Money Laundering Risk System data collection for community banks along with easing their examination procedures under the Bank Secrecy Act. .Community banks are defined by the OCC as institutions with less than $30 billion in assets. The agency used the Money Laundering Risk System data collection to assess money laundering and terrorist financing risks for smaller banks. According to the regulatory agency, such collections can instead be tailored in connection with on-site examinations, as larger banks are not subjected to the same yearly requirements. The OCC has undertaken the annual data collection since 2005 to provide examiners supervising Bank Secrecy Act and sanctions compliance with information on products, services and customers that could raise heightened money laundering/terrorist financing concerns. According to the OCC, the move was part of its regulatory and supervisory tailoring during the second term of President Donald Trump. “The OCC has determined that there are alternative, less burdensome means of assessing community banks’ money laundering/terrorist financing risks, and, therefore, believes the money laundering risk system is no longer necessary,” the agency stated. Regarding the Bank Secrecy Act, the OCC plans to emphasize “examiner discretion to place reliance, as appropriate, on satisfactory independent testing to form a basis for conclusions for specific examination procedures.” Examiners would be allowed to use discretion in carrying forward previous cycle examination conclusions for one examination cycle, when there have not been significant changes to the bank’s risk profile. The BSA examination changes are effective Feb. 1.The OCC also plans to soon draft a proposal to reduce the community bank leverage ratio requirement, which is set at 9 percent. “Today’s actions further relieve community banks of unnecessary regulatory requirements and seek to better position them to help fuel job creation and economic development in local communities across the country,” said Comptroller of the Currency Jonathan Gould. The OCC also released a request for information on the challenges and barriers community banks face with their core service providers and other third-party service providers. According to the agency, the request is intended to ensure community banks remain competitive and covers questions on the issues community banks face in contract terms and negotiations, fees, billing practices and other topics. “It also includes questions on potential actions the OCC could take to address these challenges, including with respect to burden reduction related to supervisory practices, policies and guidance, as well as other potential agency initiatives,” according to the regulatory agency.