In an October 13th Press Release, The Office of the Comptroller of the Currency (OCC), announced that it has created an updated list of permissible activities for national banks and federal savings associations.
The publication titled, Activities Permissible for National Banks and Federal Savings Associations, Cumulative, updates the list of permissible activities to reflect applicable precedent for national banks, streamlines certain entries for readability, and includes applicable interpretive letters and corporate decisions issued by the OCC affecting federal savings associations. OCC precedent remains applicable until rescinded, superseded, or revised.
Most Relevant Changes
We have reviewed the above referenced document, and have identified the 7 following updates that we feel are most relevant to our financial institution clients.
- Customer Identification Program (CIP) Requirements for Holders of Prepaid Cards. This interagency guidance clarifies that banks, savings associations, credit unions, and branches of foreign banks (depository institutions) should apply their CIPs to the cardholders of certain prepaid cards issued by the depository institutions, including when a depository institution issues prepaid cards under arrangements with third-party program managers that sell, distribute, promote, or market the prepaid cards issued by the depository institution. OCC Bulletin 2016-10 (March 21, 2016).
- Foreign Correspondent Banking Guidance. The OCC issued guidance that addresses periodic reevaluations of risks associated with foreign correspondent banking accounts that reiterates supervisory expectations and shares a range of best practices for banks to consider. OCC Bulletin No. 2016-32 (October 5, 2016). The OCC also issued a joint fact sheet with the U.S. Department of the Treasury and the federal banking agencies on the same subject. Foreign Correspondent Banking: Approach to BSA/AML and OFAC Sanctions Supervision and Enforcement (August 30, 2016).
- Community Reinvestment Act (CRA) Questions and Answers. The federal bank regulatory agencies published the Interagency Questions and Answers Regarding Community Reinvestment to provide guidance on the interpretation and application of the CRA regulations to agency personnel, financial institutions, and the public. The Interagency Questions and Answers were first published in 1996 and have been updated several times, most recently in 2016. 81 Fed. Reg. 48506 (July 25, 2016).
- Deposit Reconciliation Practices: Interagency Guidance. Interagency guidance clarifies the agencies’ supervisory expectations regarding customer account deposit reconciliation practices. OCC Bulletin 2016-16 (May 18, 2016).
- Insurance Information-Sharing Agreements. The OCC has entered into insurance information-sharing agreements with insurance regulators in 49 states as well as the District of Columbia and Puerto Rico. As of October 2017, Massachusetts is the only state with which the OCC has not entered into an information-sharing agreement.
- Enforcement Guidance. The OCC provides guidance on its policies and processes for citing violations and taking enforcement actions with respect to the Bank Secrecy Act compliance program rule (12 CFR 21.21) and its policies for citing violations of the suspicious activity reporting requirements (12 CFR 21.11). OCC Bulletin 2007-36 (August 30, 2007); OCC Bulletin 2016-6 (February 29, 2016).
- FSA Inclusion of Subordinated Debt in Regulatory Capital. With OCC approval, a wholly-owned subsidiary of a federal savings association may include an issuance of subordinated debt in its regulatory capital.
How MBAF Can Help
MBAF and the OCC reminds banking professionals that they should not rely solely on this updated list to determine the activities permissible for their institutions. Instead, the banks and federal savings associations should review the authorities cited in the publication and other relevant precedent before engaging in any listed activity.
If, after reviewing the document, you still have questions regarding the updated list of permissible activities, please feel free to contact our financial institutions specialists. We would be happy to help you review, understand and apply the new permissions in the most effective way for your particular institution.
Taxation and regulatory issues regarding the new list of permissible activities for banks can be complex. If you would like to benefit from our expertise in these areas or if you have further questions on this Advisory, do not hesitate to contact our Financial Institutions specialists, or call us at 1-800-239-1474.