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ARTICLE · 19 JUNE 2023

Banking Regulators Release Guidance On Third-Party Partnerships

Cooley LLP
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On June 6, 2023, the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency (OCC)...

United StatesFinance and Banking
Obrea Poindexter
Obrea Poindexter
Sean Ruff
Sean Ruff
Elyse Moyer
Elyse Moyer
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On June 6, 2023, the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency (OCC) issued final joint guidance on managing risks associated with third-party relationships. Promulgated after the publication of and comments from stakeholders on the July 2021 proposed guidance, this final guidance details a risk-based approach to evaluating, negotiating and monitoring third-party partnerships under which banks are expected to provide more scrutiny to partnerships that are more complex, risky or operationally critical. While the guidance specifically notes the "significant benefits" of third-party partnerships, such as those with fintechs, the regulators emphasize the risks that third-party relationships present – and they note that the use of third parties does not relieve a banking organization of its responsibility to comply with existing laws and regulations. This guidance

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