OCC Underscores Risks For Small Banks

In its Semiannual Risk Perspective for Spring 2019, the OCC described banks as being in generally good shape as far as capital, leverage and short-term performance. Nonetheless, the regulator pointed to a number of significant big picture risks, particularly as to AML compliance and operational / Fintech tech. The regulator's discussion of those two risk was the most interesting, and perhaps worrisome:

• AML: AML-related deficiencies stem from three primary causes: inadequate customer due diligence and enhanced due diligence, insufficient customer risk identification, and ineffective processes related to suspicious activity monitoring and reporting, including the timeliness and accuracy of Suspicious Activity Report filings. Talent acquisition and staff retention to manage compliance programs and associated operations present ongoing challenges, particularly at smaller regional and community banks.