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News Release 2016-123 | October 5, 2016

OCC Releases Risk Reevaluation Guidance for Foreign Correspondent Banking

WASHINGTON — The Office of the Comptroller of the Currency (OCC) today issued risk management guidance to national banks, federal savings associations, and federal branches and agencies that addresses periodic reevaluations of risks associated with foreign correspondent banking accounts. The guidance reiterates OCC’s supervisory expectation that banks assess these risks as part of their on-going risk management and due diligence practices.

The guidance shares a range of best practices for banks to consider when conducting these periodic reevaluations and making account retention or termination decisions. For example, banks may consider establishing governance functions to monitor adherence to policies and procedures when considering whether to retain or terminate foreign correspondent accounts. Best practices in this area include communicating these decisions to bank senior management with consideration given to potential international financial inclusion impacts. Other best practices include consideration of mitigating information obtained from foreign financial institutions and ensuring a clear audit trail of the reasons and method used for account closure.

As usual when managing risks, banks apply the mandatory requirements of the Bank Secrecy Act and Anti-Money Laundering laws and regulations. Banks should ensure that decisions to terminate foreign correspondent account relationships resulting from risk reevaluation are based on analysis of the risks presented by individual foreign correspondent account relationships and the banks’ ability to manage those risks.

As a general matter, the OCC does not direct banks to open, close, or maintain individual accounts, nor does the agency encourage banks to engage in the termination of entire categories of customer accounts without regard to the risks presented by an individual customer or the bank’s ability to manage the risk. Decisions to retain or terminate banking relationships reside with the bank.

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