OCC report discusses key risks for federal banking system
AML AND COMPLIANCE NEWS |
On Jan. 18, 2018, the Office of the Comptroller of the Currency (OCC) shared their report on key concerns for the federal banking system in its Semiannual Risk Perspective for Fall 2017. Credit, operational and compliance risks were the primary areas noted in the report.
The OCC’s report discussing key risks for the federal banking system evaluated data as of June 30, 2017 and covered four main areas: operating environment, bank performance, trends in key risks and supervisory actions. It focused on the issues that pose the biggest threats to OCC regulated financial institutions.
The OCC’s report highlighted that the credit environment continues to be influenced by aggressive competition, tighter spreads and slowing loan growth, leading to easing in the underwriting process and increasing concentrations in select loan portfolios, which could both lead to heightened risk if the economy weakens or the markets tighten quickly. The OCC also highlighted that operational risk continues to challenge the banking system because of the increasing complexity of cybersecurity threats and the use of third-party service providers. Compliance risk, as stated by the OCC, also remains elevated for banks as they continue to manage money-laundering risks, as well as consumer compliance risks, particularly due to the increasing complexity in consumer regulations.