United States

OCC releases its Semiannual Risk Perspective report


The Office of the Comptroller of the Currency’s (OCC) spring Semiannual Risk Perspective is similar to the report issued in the fall 2015. The top risk concerns continue to be strategic, credit, operational and compliance. Growing competition in the industry results in banks offering innovative products and services. This increases strategic risk, but failure to evolve in innovative ways can put a bank at a competitive disadvantage. As underwriting standards ease and loan growth increases, credit risk also increases. The increased reliance on third party arrangements and cybersecurity threats keeps operational risk in the forefront. Compliance risk management remains complex and poses challenges as systems are implemented to deal with changes in technology and new or revised regulations, as well as to manage Bank Secrecy Act/Anti-Money Laundering (BSA/AML) risks.

The report also outlines OCC supervisory priorities for the next 12 months. These are divided into two categories corresponding to the OCC’s operating units. In the areas of BSA/AML and compliance those priorities are:

Large bank supervision

  • Effectiveness of BSA/AML programs and controls in dealing with money-laundering schemes, keeping up with technological changes and overall risk in this area
  • Compliance with the TILA-RESPA Integrated Disclosure (TRID) requirements
  • Compliance with the Military Lending Act (MLA) amendments
  • Adequacy of enterprise-wide compliance risk management as it relates to the Flood Disaster Protection Act and the Servicemembers Civil Relief Act (SCRA)
  •  Compliance with the Community Reinvestment Act (CRA) and fair lending laws and regulations
  • Ability of banks to identify and respond to risks posed by new products, services or terms
  • Ongoing sharing of information and coordination of examinations with the Consumer Financial
  • Protection Bureau (CFPB) to assess overall compliance with consumer laws, regulations and guidance

Midsize and community bank supervision

  • Changes in policies and practices regarding higher-risk customers
  • Determining whether overall BSA/AML program controls are commensurate with the bank’s products, services, customers and geographies
  • Effectiveness in complying with consumer laws, regulations and guidance, including TRID, CRA, fair lending laws and MLA amendments