AML Update: OCC identifies compliance as a top risk in 2020

Last month, the Office of the Comptroller of the Currency (OCC) released its Semiannual Risk Perspective Report identifying the key risks facing banks [1] in the 6-month period ending June 30, 2020.  This period includes the initial impact of the COVID-19 pandemic and the transition to remote work for many and notes the heighted compliance risks that may result from the changes caused by the pandemic.

The OCC notes that “[c]ompliance risk is elevated due to a combination of altered work environments and the requirement to quickly implement new federal, state, and proprietary programs designed to support businesses and consumers.” [2] While many have commented on the significant changes brought on by the pandemic, including us, this is an explicit acknowledgement by a key regulator that the pandemic and remote working may lead to new compliance risks for banks. As per the OCC, the BSA remains one of the top risks facing banks, given the influx of transactions relating to government programs and potential pandemic-related scams. 

The OCC’s comments highlight the challenges inherent in BSA compliance and underscore the importance of having good governance in place when dealing with a disruption or managing a crisis.  As we look ahead to the next six months, we can expect the OCC and other banking regulators to continue to focus on compliance risk and risk posed by a potentially challenging operating environment.  While many banks already have robust policies and procedures in place that are sufficient to address these risks, now could be a good time to consider whether there are opportunities to enhance the design or implementation of relevant policies and procedures.

We also suggest paying particular care to whistleblower procedures and hotlines, as this is one way to learn of emerging issues.  Our recent whistleblowing survey shows that employees are not yet clear on whether the pandemic has had an impact on whistleblowing, but there is no doubt that the massive shift to remote working will change whistleblowing trends.  As such, in addition to checking in with employees in the normal course, it may be helpful to reinforce with employees that hotline resources remain available to them and to check hotline reports for trends or aberrations.

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[1] The term “banks” is defined in the Report to refer to: national banks, federal savings associations, and federal branches and agencies.   

[2] Report at 1.