2023 Regulatory Agendas: Federal Banking Regulators

KPMG Regulatory Insight

• Key Interagency final and proposed rules for banks (including Basel III and other capital requirements, resolution-related requirements, and CRA revisions) expected soon.
  
• Final and proposed rules from FinCEN on beneficial ownership information and customer due diligence expected in Fall 2023.
  
• Key CFPB final, proposed, and pre-rule agenda items continue focus on fees (overdrafts, insufficient funds, and credit card) and personal financial data rights (Section 1033 “Open Banking”), all expected in Fall 2023.
  
• The agendas reiterate regulators’ heightened expectations for robust risk management; banks should be “on the balls of their feet”.

The federal banking regulators release their Spring 2023 Regulatory Agendas (including the Federal Reserve Board (FRB), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Consumer Financial Protection Bureau (CFPB), and the Financial Crimes Enforcement Network (FinCEN). Notable planned final and proposed rulemakings, as well as related KPMG Regulatory Alerts, include:

OCC Semi-Annual Risk Perspectives Report

In a separate release, the OCC publishes the Spring 2023 edition of its Semiannual Risk Perspectives Report highlighting OCC’s view on key risks and issues facing the federal banking system. The OCC adds (in an accompanying statement), that going forward, the agency “expects banks to ‘be on the balls of their feet’ with regards to risk management, just as [their] examiners are.” 

Key Risks. The OCC identifies key risk themes in these four areas:

1. Liquidity, including access to cost-efficient funding sources, stress testing, interest rate risk modeling, and reference rate transition and LIBOR phase-out.
2. Credit risk, including commercial and retail credit.
3. Operational risks, including cybersecurity, innovation and adoption of new products and services, and third-party risk management (TPRM).
4. Compliance risks, including risks associated with Bank Secrecy Act (BSA) and OFAC compliance, fair lending and consumer compliance, and relationships with third parties, including fintechs.

Key Issues. The OCC highlights additional issues facing the federal banking system, including:  

• Climate-related financial risks, including expectations that banks have robust risk management programs in place to identify, measure, monitor, and control climate-related financial risks. The agency’s supervisory efforts are focused on safety, soundness, and fairness across risk management programs, board governance and senior management structure, and climate scenario analysis.
• Investments in technology infrastructure, acknowledging that while many banks continue to invest resources in maintaining and updating existing technology architecture, as well as developing and implementing innovative technologies, the “prolonged use of older or legacy systems could increase the likelihood of operational outages, security vulnerabilities, system maintenance challenges, and other operational resilience concerns.” OCC’s supervision focuses on technology resilience and identified increasing concerns related to end-of-life (EOL) systems, patch management, and system and data architecture.

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See related KPMG Regulatory Insights materials:

• Point of View | Ten Key Regulatory Challenges of 2023: Mid-year Look Forward
• Regulatory Alert | SEC 2023 Regulatory Agenda

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