The OCC is taking a closer look at how banks make decisions to terminate business or correspondent relationships to avoid regulatory scrutiny—a process known as “de-risking”—and could issue guidance in the future based on its findings, Comptroller of the Currency Thomas Curry said today.
“Our goal is to identify current practices and possible gaps in existing policies and procedures for conducting periodic client risk re-evaluations and for making account determination decisions,” Curry said, adding that the OCC is currently in the process of gathering and analyzing data. “It may be that we’ll find it appropriate to issue guidance to OCC-supervised institutions to better communicate what we’ve learned.”
While he stated that “the decision to exit a line of business or to terminate a banking relationship with a customer resides solely with the bank, not with the OCC,” Curry also warned that de-risking can have “regrettable” consequences, including the termination of longstanding business relationships, financial hardship for customers who are unable to transmit funds to family members in troubled countries and an increase in underground banking activity, as individuals who find themselves cut off from legitimate financial services could seek out illegal channels to process transactions.
