On September 25, 2018, the Office of Comptroller of the Currency (OCC) released its bank supervision operating plan for fiscal year 2019, which begins October 1, 2018, and ends September 30, 2019. The plan is developed by the OCC’s Committee on Bank Supervision (CBS) and is aligned to “The OCC’s Strategic Plan, Fiscal Years 2019-2023” and the National Risk Committee’s risk priorities.1
The operating plan provides guidance for policy initiatives and supervisory strategies for national banks, Federal savings associations, Federal branches, Federal agencies, and technology service providers, and serves as a roadmap to guide OCC staff in the identification of supervisory priorities, planning and allocation of resources for fiscal year 2019. The OCC’s priority objectives are similar for Large Bank Supervision, and Midsize and Community Bank Supervision departments, and will focus on a range of issues, including cybersecurity, credit risk, and Bank Secrecy Act/Anti-money Laundering (BSA/AML) compliance.2
What this means
The fiscal year 2019 plan identifies priorities across each of the CBS operating units – the Office of the Chief National Bank Examiner, Compliance and Community Affairs, Large Bank Supervision, and Midsize and Community Bank Supervision, and while the objectives are similar, CBS managers will differentiate banks size, complexity and risk profile when developing individual bank supervisory strategies. The OCC will also adjust supervisory strategies throughout fiscal year 2019 in response to any emerging risks and priorities.3 The development of these supervisory strategies will focus on the following:4
- Cybersecurity and Operational Resiliency – the emphasis being on maintaining information technology systems and remediating identified concerns.
- Loans and Credit Risk – which includes commercial and retail credit loan underwriting, concentration risk management, credit risk management, and the allowance for loan and lease losses, including preparations for the current expected credit losses accounting rule.
- BSA/AML – with a focus on determining whether AML compliance programs keep pace with changing risk environments and regulatory developments.
- Compliance Related Change Management Processes – the emphasis being on the implementation of regulatory requirements, including the Home Mortgage Disclosure Act, the integrated mortgage disclosure requirements under the Truth in Lending Act, Real Estate Settlement Procedures Act, and the Military Lending Act.
- Internal Controls and end-to-end Processes for Product and Service Delivery – with a focus on the introduction of new or revised products, and the implementation of strategic partnerships.
In addition to these specific priorities the OCC recommends that the CBS operating units should also remain focused on banks’ control functions and, as appropriate, leverage the institutions’ audit, loan review, and risk management processes.5
As part of the OCC’s fiscal year 2019 priorities, and to facilitate an agency-wide view of risk on selected topics, the CBS supervision departments will prioritize and coordinate resources, and conduct various horizontal risk assessments throughout the fiscal year. The CBS itself may direct horizontal assessments, as appropriate, during the supervisory cycle.6 The OCC emphasizes that as the environment is a dynamic one, the supervisory priorities may change throughout fiscal year 2019, in response to emerging risks. The agency will therefore provide periodic updates about supervisory priorities and horizontal risk assessments in the Semiannual Risk Perspective Report.7
- “OCC Releases Bank Supervision Operating Plan for Fiscal Year 2019,” Covington & Burling LLP, September 27, 2018. Access at: https://www.covfinancialservices.com/2018/09/occ-releases-bank-supervision-operating-plan-for-fiscal-year-2019/.
- “OCC Releases Bank Supervision Operating Plan for Fiscal Year 2019,” Covington & Burling LLP, September 27, 2018. Access at: https://www.covfinancialservices.com/2018/09/occ-releases-bank-supervision-operating-plan-for-fiscal-year-2019/. “Fiscal Year 2019 Bank Supervision Operating Plan Office of the Comptroller of the Currency Committee on Bank Supervision,” Office of the Comptroller of the Currency. Access at: https://www.occ.gov/news-issuances/news-releases/2018/nr-occ-2018-104a.pdf.
- “Fiscal Year 2019 Bank Supervision Operating Plan Office of the Comptroller of the Currency Committee on Bank Supervision,” Office of the Comptroller of the Currency. Access at: https://www.occ.gov/news-issuances/news-releases/2018/nr-occ-2018-104a.pdf.
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