Recent regulatory actions highlight the Office of the Comptroller of the Currency’s (OCC) intensified scrutiny towards financial institutions, particularly large banks, focusing on compliance, risk management, and operational resilience. The OCC has issued multiple enforcement measures, including cease-and-desist orders, aimed at addressing deficiencies in anti-money laundering (AML) practices and other compliance areas. These developments reflect the regulator’s commitment to strengthening oversight to mitigate financial crimes and systemic risks in the banking sector.
Why is the OCC focusing on AML compliance?
The OCC recently took action against Bank of America, citing failures in meeting Bank Secrecy Act (BSA) and sanctions compliance requirements. The regulator found issues such as delays in filing suspicious activity reports, prompting a directive for enhanced internal controls. Bank of America must now implement an improved system to manage risks related to money laundering, terrorism financing, and sanctions violations. Similarly, USAA Federal Savings Bank faced a renewed cease-and-desist order due to ongoing issues with internal audits and suspicious activity reporting, restricting the introduction of new products or services without prior risk evaluations.
What other financial institutions faced penalties?
In addition to the actions against Bank of America and USAA, Axiom Bank was cited for weaknesses in its BSA/AML compliance program. Furthermore, TD Bank’s U.S. division incurred a $450 million penalty for deficiencies in its AML processes. These cases underscore the OCC’s broader strategy to ensure compliance across the financial sector, aiming to reduce vulnerabilities to illicit financial activities.
Past reports highlight the OCC’s ongoing emphasis on adapting compliance frameworks to align with evolving risks. For instance, its Semiannual Risk Perspective outlines critical areas such as cyber threats, third-party risk management, and operational resilience. The agency also advocates for stronger authentication protocols and advanced threat detection, with many financial institutions incorporating artificial intelligence (AI) and machine learning into fraud prevention strategies.
The OCC’s Fiscal Year 2025 operating plan emphasizes further oversight of banks’ partnerships with fintech companies, ensuring these relationships meet stringent compliance standards. Acting Comptroller Michael J. Hsu has also expressed support for federal payments regulation and a chartering framework for nonbanks, signaling potential regulatory expansions.
Enhanced regulatory scrutiny, while aimed at protecting financial systems, poses operational challenges for banks. Institutions must adapt by investing in technology, training, and infrastructure to meet regulatory expectations. Compliance officers, particularly within larger organizations, should prioritize aligning internal operations with updated guidelines to avoid penalties and reputational risks. These measures could also lead to improved resilience against financial crimes and greater consumer trust.
