FDIC orders bank to plan termination of relationships with “significant” fintech partners

Bank Regulatory FDIC Consent Order Fintech Risk Management Enforcement

Recently, the FDIC released a consent order against a Tennessee bank as part of its release of January Enforcement Decisions and Orders. The FDIC stated that within sixty days of the effective date of the consent order, the bank must “submit a general contingency plan to the Regional Director… [on] how the [b]ank will administer an effective and orderly termination with significant third-party FinTech partners,” as part of its Third-Party Risk Management program for the bank. The Program must assess and manage the risks posed by all fintech firms associated with the bank. It will include policies related to due diligence and risk assessment criteria that are appropriate to the products and services provided by the fintech partner. The bank must also engage an independent firm for completion of a comprehensive Banking-as-a-Service Risk Assessment Report.

The bank further consented, without admitting or denying any charges of unsafe or unsound banking practices, to board supervision of the bank’s management and approval of the bank’s policies and objectives, qualified management, the Regional Director’s prior consent for new or expanded lines of business that would result in an annual 10 percent growth in total assets or liabilities, and a comprehensive strategic plan.