The Office of the Comptroller of the Currency (OCC) announced measures aimed at alleviating the regulatory strain on community banks. By clarifying examination procedures and ceasing certain data collection requirements related to money laundering, the OCC seeks to streamline the compliance process associated with Bank Secrecy Act/Anti-Money Laundering (BSA/AML) for these financial institutions. These updates are intended to balance regulatory rigor with the low risk profile typically associated with community banks, fostering an environment conducive to local economic contributions.
In previous communications, the OCC has consistently highlighted its commitment to minimizing unnecessary regulatory demands on community banks. Earlier announcements focused on reducing the community bank leverage ratio and tailoring regulations in line with the 2018 Economic Growth Act. The recent bulletins continue this trend by refining the examination approach, aligning with historical efforts to ease banking operations where feasible.
What Changes Are Introduced?
The OCC released two bulletins that focus on adjusting examination procedures and ending the Money Laundering Risk (MLR) system data collection for community banks. These modifications consider the generally low levels of money laundering and terrorist financing risks associated with such banks. This step is part of a broader initiative to enhance operational efficiency without compromising on regulatory goals. Both bulletins are titled respectively regarding the specific procedural changes and the discontinuation of MLR data collection.
How Do These Changes Impact Community Banks?
The updated procedures are intended to relieve community banks of burdensome regulatory requirements, thereby allowing them to concentrate on their core functions. By reducing the regulatory obligations, these financial institutions can allocate more resources towards local economic development.
“Today’s actions further relieve community banks of unnecessary regulatory requirements,”
stated Jonathan V. Gould, Comptroller of the Currency, emphasizing the positive implications for job creation and local economic growth.
In conjunction with these new policies, an upcoming proposal aims to lower the community bank leverage ratio requirement, reflecting the OCC’s ongoing efforts to align regulatory demands with actual risk levels observed in community banking activities.
“The OCC will continue to tailor our risk-based supervision to focus on material financial risk,”
Gould mentioned, highlighting the regulator’s commitment to proportional oversight.
By targeting inefficiencies and unnecessary reporting, the OCC intends to free resources within community banks, enabling a sharper focus on community support and growth initiatives. Such measures align with broader regulatory trends aimed at promoting greater engagement of financial institutions in economic development without sacrificing robust oversight.
Community banks, benefiting from decreased regulatory obligations, are poised to enhance their role in local community development. With these changes, the OCC demonstrates an adaptable regulatory approach while maintaining vigilance against financial crime risks. This dual focus allows banks to thrive financially while providing substantive support to their communities.
