OCC Risk Perspective Highlights Human Trafficking, AML, Other Compliance Risks

In June 2022, The Office of the Comptroller of the Currency published its Semiannual Risk Perspective for Spring 2022. The report highlights key issues facing the federal banking system, including critical risks that should be top of mind for RMA Members.

Part III of the OCC’s Risk Perspective Report focused on “Trends in Key Risks,” including cybersecurity, adoption of new products & services, third-party risk management, and other notable operational risks.

The OCC also dedicated a chapter to compliance risk, noting, “compliance risk is heightened, driven by regulatory changes and policy initiatives that continue to challenge bank risk management.” According to the OCC, key compliance risks include those regarding:

• BSA/AML and the Office of Foreign Assets Control (OFAC)
• Consumer Compliance
• Community Reinvestment Act/Fair Lending

The report notes that in November 2021, The Financial Crimes Enforcement Network called attention to an upward trend in environmental crimes and associated illicit financial activity by issuing Notice FIN-2021-NTC4. Combating corruption and transnational criminal organizations are among the priorities FinCEN announced in the Anti-Money Laundering and Countering the Financing of Terrorism National Priorities issued on June 30, 2021.

According to FinCEN, “Environmental crimes frequently involve transnational organized crime and corruption and are often associated with a variety of other crimes including money laundering, bribery, theft, forgery, tax evasion, fraud, human trafficking, and drug trafficking.”

Human trafficking is a global crisis, with more than 25 million victims worldwide. This tragic issue involves complex money flows, regulatory implications, and reputational risk for banks. RMA will be hosting a Risk Readiness webinar on July 26 to discuss human trafficking trends and the amount of money potentially flowing through banks as a result. The webinar will also address relevant regulation, frameworks, and laws applying to banks, and recommended steps for financial institutions to mitigate and prevent human trafficking. Attendees will receive an action guide, which outlines concrete steps financial institutions can take to manage related risks.

RMA is also hosting the Bank Secrecy Act/Anti-Money Laundering Forum, September 22, in Columbus, Ohio. The forum will gather risk governance professionals to discuss new and enhanced BSA/AML, financial crime, and related regulations/guidance.

Meanwhile, RMA is engaging in other activities around compliance risk. The ongoing COVID-19 pandemic and other factors have increased the level of consumer compliance risk at banks. The OCC highlights staff shortages and challenges pertaining to "monitoring and testing controls, including complaint monitoring and post-implementation testing to ensure new products and services have been implemented as expected and disclosed." RMA will discuss these issues and more at the Chief Compliance Officer Roundtable on September 29 in Pittsburgh, hosted by PNC Bank.

Regarding the Community Reinvestment Act, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC last May jointly issued a notice of proposed rulemaking “to strengthen and modernize the CRA regulatory framework.” RMA and Debevoise & Plimpton will be writing a comment letter on CRA in August.

We hope you will join us at the Risk Readiness Webinar “Human Trafficking and Banks – Addressing the Hidden Risk” on July 26. Please reach out with any questions around RMA’s efforts to address compliance risks.