OCC Updates Guidance on Violations of Laws and Regulations in Comptroller’s Handbook

Federal Issues OCC Bank Supervision Community Banks

On May 23, the OCC issued OCC Bulletin 2017-18 announcing updated guidance on its policies and procedures regarding violations of laws and regulations for its examiners. The updates will be reflected in its “Bank Supervision Process,” “Community Bank Supervision,” “Federal Branches and Agencies Supervision,” and “Large Bank Supervision” booklets as well as other sections of the Comptroller’s Handbook and internal guidance. According to the Bulletin, an International Peer Review Report from 2013 noted that the OCC could improve its supervisory effectiveness. In response, the OCC released Bulletin 2014-52 to address the report’s concerns. These latest updates are an extension of the 2014 Bulletin to support the OCC’s mission of ensuring a safe and sound federal banking system by “emphasizing timely detection and correction of violations before they affect a bank’s condition.”

The OCC’s updated guidance implements certain goals and practices, including:

• ensuring the consistency of the purpose, processes, and procedures within and across all OCC lines of business, including: community, midsize, and large banks; federal branches and agencies; and banks overseen by the OCC’s Special Supervision group;
• communicating violations using a consistent format such as: (i) using legal citation and description; (ii) summarizing relevant statutory or regulatory requirements; (iii) including facts supporting the violation and root causes; (iv) outlining required corrective actions; and (v) noting commitments to corrective action by board and management;
• reinforcing the importance of timely and thorough follow-up and tracking of bank management’s corrective actions and milestones;
• conveying the relationship of violations to “matters requiring attention, CAMELS/ITCC or ROCA ratings, and the bank’s risk appetite and profile;” and
• emphasizing the need for examiners to timely and effectively communicate with the bank’s board of directors and management team as well as with OCC supervisors.

The policy goes into effect July 1, 2017.