The OCC has issued two bulletins clarifying how it will handle debanking at its supervised institutions.
One bulletin states that the agency will assess debanking in connection with licensing activities, including, but not limited to, charter applications, charter conversions, applications to exercise fiduciary powers, branch applications and requests for approval of business combinations, and as part of its Community Reinvestment Act reviews.
“Specifically, the OCC considers a bank's past record and current policies and procedures to avoid engaging in politicized or unlawful debanking when the agency evaluates the applicable statutory and regulatory factors for licensing activities,” the OCC said, in announcing the bulletins. “Debanking considerations are also assessed in determining a bank's CRA rating.”
The OCC said it will tailor its consideration of politicized or unlawful debanking in licensing applications filed by a bank and in a bank's performance under the CRA based on the size, complexity and overall risk profile of the relevant bank.
In a separate bulletin, the OCC reminded institutions of the limited circumstances that allow for the release of customer financial records and the proper use of suspicious activity reports. The OCC said it is reviewing its approaches to Bank Secrecy Act/anti-money laundering supervision to ensure that they are not contributing to debanking.
On August 7, President Trump signed an Executive Order “Guaranteeing Fair Banking for All Americans.” This sweeping action prohibits financial institutions of any size from denying services to individuals or businesses based on political or religious beliefs, orientation, or lawful industry involvement.
The Executive Order directed banking agencies to adopt policies to ensure that financial institutions do not use reputational risk as a basis for restricting access to banking services.
Earlier this year, the OCC removed references to reputation risk from its handbooks and guidance documents. The agency said it also is developing a rule that will delete reputational risk references from its regulations.
“The OCC is taking steps to end the weaponization of the financial system,” Comptroller of the Currency Jonathan V. Gould, said, in a statement. “We are working to root out bank activities that unlawfully debank or discriminate against customers on the basis of political or religious beliefs, or lawful business activities. If and when the OCC identifies such activity, it will take action to end it.”
As part of its ongoing review to assess debanking, the OCC initially requested information from its nine largest regulated institutions. The OCC also updated its online customer complaint website to assist consumer reporting of any debanking by its regulated institutions.
For financial institutions, regulators, compliance professionals, and their customers, the debanking stakes could not be higher.
On September 24, Ballard Spahr will hold a webinar, “A New Era for Banking: What President Trump's Debanking Executive Order and Related State Laws Mean for Financial Institutions, Government, and Banking Customers.”
During the webinar, we will explain why financial institutions should promptly engage counsel to conduct a privileged review of all policies, procedures and adverse actions to ensure compliance with the Executive Order.
The webinar will be held between 12:00-1:30 ET.
Register here
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