WASHINGTON—The Office of the Comptroller of the Currency is moving to ease regulatory pressure on community banks, unveiling new supervisory steps and a forthcoming rule proposal aimed at helping smaller institutions stay competitive and sustain local lending.
In a package of actions announced this week, the OCC said it is tailoring oversight to focus on material risk and scaling back requirements that it says offer little value relative to the burden they impose.
“Community banks provide the majority of small business lending and are essential to a diverse, competitive and resilient financial system,” Comptroller Jonathan V. Gould said. He added that the changes are intended to “relieve community banks of unnecessary regulatory requirements” and better position them to support economic activity.
A key move is the OCC’s decision to apply Bank Secrecy Act/Anti-Money Laundering exam procedures based on each community bank’s individual risk profile, rather than on minimum standards that examiners and banks have long argued were too rigid. The agency is also ending its Money Laundering Risk (MLR) data collection, saying the step will reduce burden without weakening BSA/AML compliance.
The OCC separately issued a request for information seeking input on challenges community banks face when dealing with core processors and other critical third-party vendors—relationships that often limit smaller institutions’ ability to modernize and compete. The agency is asking what barriers exist and what steps regulators might take to address them.
OCC officials said additional relief is coming, including a proposal to reduce the community bank leverage ratio requirement. The agency emphasized that it intends to keep working with fellow regulators to eliminate unnecessary rules and support the role community banks play in local economic development.