Federal Banking Agencies Extend Comment Period for Proposed Third-Party Risk Management Guidance
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Key takeaways:
- On July 19, 2021, the Board of Governors of the Federal Reserve System (“FRB”), Federal Deposit Insurance Corporation (“FDIC”), and the Office of the Comptroller of the Currency (“OCC” and together with the FDIC and FRB, the “Agencies”) issued for comment proposed interagency guidance on how banking organizations should manage the risks associated with third-party relationships (“Proposed Guidance”). On September 10, 2021, the Agencies extended the comment period by one month, to October 18, 2021.
- The Proposed Guidance responds to industry feedback requesting alignment among the Agencies with respect to third-party risk management guidance, and would replace each of the Agencies’ existing guidances. The Proposed Guidance is based on, and closely tracks, the OCC’s existing guidance and is generally consistent with, but broader and more comprehensive than, the FRB’s and FDIC’s respective guidances.
- The Agencies state that the Proposed Guidance is intended to provide “a framework based on sound risk management principles that banking organizations may use to address the risks associated with third-party relationships” and describes risk management processes throughout the life cycle of a third-party relationship and expectations for governance and controls, including expectations for the board of directors and senior management.