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OCC Releases Guidance on Third-Party Relationships


Oct 31 - The Office of the Comptroller of the Currency has issued updated risk management guidance for national banks and federal savings associations related to third-party relationships.

“We have concerns regarding the quality of risk management on the growing volume, diversity, and complexity of banks’ third-party relationships, both foreign and domestic,” said Comptroller of the Currency Thomas J. Curry. “This guidance provides more comprehensive instruction for banks to ensure these relationships and activities are conducted in a safe and sound manner.”

Third-party relationships include business arrangements between the bank and another entity, by contract or otherwise. The use of third parties does not diminish the responsibility of the board and management to ensure the activity conforms to safe and sound banking practices and complies with applicable laws.

The guidance notes that banks face new or increased operational, compliance, reputation, strategic and credit risks when engaging in third-party relationships. The OCC advises banks to adopt risk management processes commensurate with the level of risk and complexity of their third-party relationships, and expects more comprehensive oversight and management of third-party relationships that involve critical bank activities. To manage risks from third-party relationships, banks should:

The guidance rescinds OCC Bulletin 2001-47, “Third-Party Relationships: Risk Management Principles,” and OCC Advisory Letter 2000-9, “Third-Party Risk.” This guidance supplements and should be used in conjunction with other previously issued guidance on third-party relationships as listed in appendix B.

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