Risk Control
In Re: City National Bank
Date: Jan. 31, 2024
Issue: City National Bank’s consent order with the Office of the Comptroller of Currency (OCC) related to alleged systemic deficiencies in the bank’s risk management and internal controls.
Case Summary: City National Bank agreed to pay $65 million to resolve the Office of the Comptroller of Currency’s allegations that the bank failed to maintain effective risk controls related to money laundering and fair lending.
OCC issued its “OCC Guidelines Establishing Heightened Standards for Certain Large Insured Banks, National Banks, Insured Federal Savings Associations, and Insured Federal Branches” (heightened standards). The heightened standards provide that covered institutions should establish and adhere to a written risk governance framework to manage and control their risk-taking activities. The heightened standards also provide minimum standards for the institutions’ boards of directors to oversee the risk governance framework. OCC alleged that City National Bank has been noncompliant with the heightened standards since Dec. 31, 2020. OCC considered the alleged practices of City National Bank to be a pattern of misconduct.
OCC also alleged that City National Bank violated the Bank Secrecy Act (BSA) and its implementing regulations. The BSA establishes reporting, program, and recordkeeping, requirements for national banks, federal savings associations, federal branches and agencies of foreign banks. The law also requires banks to provide documentation for any transactions that add up to $10,000 or more. City National Bank allegedly engaged in unsafe and unsound practices concerning its operational risk management, compliance risk management, fair lending, strategic risk management, investment management, and anti-money laundering practices.
Along with paying $65 million to the U.S. Department of Treasury, City National Bank will take broad and comprehensive corrective actions to improve its strategic plan. City National Bank agreed to create a compliance committee, submit initial and ongoing progress reports detailing the bank’s corrective actions, and submit an “action plan” to the OCC. Additionally, City National Bank will create an “investment governance program” focused on risk management to identify conflicts and known deficiencies in the bank’s policies and procedures.
Bottom Line: City National Bank did not admit or deny OCC’s findings.
Documents: Consent Order
