On October 16, the OCC announced a formal agreement with a national bank in Florida for alleged unsafe or unsound practices related to board oversight, corporate governance, strategic and capital planning, and compliance with the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) requirements. The OCC also alleged violations involving the Suspicious Activity Reports rule under the Bank Secrecy Act and the due diligence program requirements for correspondent accounts for foreign financial institutions under the USA PATRIOT Act.
The agreement, which imposes broad corrective obligations, outlines a series of measures the board and management must implement to strengthen oversight, enhance compliance, and ensure adherence to OCC standards.
Specifically, the agreement requires the implementation of:
- Independent compliance committee. The board must appoint a committee composed mostly of independent directors to monitor remediation, meet monthly, and provide quarterly reports to the OCC.
- Corporate governance and oversight. The board must adopt a written governance program outlining risk appetite, management succession, compensation oversight, and controls on insider transactions, supported by clear reporting lines and accountability procedures.
- Strategic and capital planning. The bank must prepare a three-year strategic and capital plan, subject to OCC non-objection, detailing risk tolerances, growth strategies, and capital adequacy. Any material deviation from those plans requires prior regulatory approval.
- BSA/AML compliance program. The institution must maintain a qualified BSA Officer with adequate authority and resources, adopt enhanced internal controls, update customer-due-diligence procedures, and improve suspicious-activity monitoring to ensure timely and accurate filings.
- Independent testing and accountability. The bank must implement an annual BSA/AML audit program to test policy adherence, system accuracy, and staff training, with findings escalated promptly to the board for corrective action.
Putting It Into Practice: Federal regulators continue to remain active in enforcing selective federal financial laws (previously discussed here and here). BSA/AML compliance is one area where there has not been a federal retrenchment. National banks should evaluate their existing frameworks now and ensure they have appropriate BSA/AML controls in place.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
