Forward look: Banks might want to evaluate and probably revise their insurance policies for dealing with regulation enforcement information requests to make sure compliance with the brand new OCC steerage and Trump’s debanking govt order.
Key perception: The OCC’s bulletin displays a major shift in regulatory strategy, signaling that the Trump administration views earlier financial institution cooperation with regulation enforcement after Jan. 6 as proof of political debanking reasonably than official compliance efforts.
What’s at stake: Banks face the problem of balancing conflicting authorized obligations underneath the Bank Secrecy Act, which requires sharing sure info with regulation enforcement, and the Right to Financial Privacy Act, which protects buyer information from improper disclosure.
WASHINGTON — The Office of the Comptroller of the Currency advised banks that they’ve an obligation to guard shoppers’ financial privacy when regulation enforcement businesses demand information, highlighting the tough dilemma banks discovered themselves in after supporters of President Donald Trump attacked the Capitol on January 6, 2021.
After the rioters on Jan. 6 broke into the U.S. Capitol constructing to try to forcefully disrupt the ratification of the 2020 presidential election, regulation enforcement businesses reached out to sure banks requesting information as a part of their investigation, in response to a report from a Republican-led particular panel on the Senate Judiciary Committee. Banks shared a number of the data sought by regulation enforcement, in response to the report.
The OCC now issued a bulletin to “remind banks of their authorized obligations to guard their clients’ financial data, “even when the request for info comes from authorities businesses. Banks have argued that these requests from regulation enforcement depart them between a rock and a tough place, attempting to steadiness their requirement to share info underneath the Bank Secrecy Act and shield client info.
The report issued by the Judiciary Committee is a crucial instance of a Congressional investigation that informs regulatory coverage. The bulletin from the OCC exhibits that its new head, Jonathan Gould, is prone to toe the Trump administration line on pursuing consent orders and different actions on perceived political and non secular debanking, as within the case of the Jan. 6 rioters.
The OCC bulletin tells banks to evaluate the chief order on debanking, and to “alter their insurance policies and procedures” if wanted. The govt order warned that the administration would pursue earlier situations of debanking on political and non secular grounds, which might embrace the Jan. 6 rioters.
The bulletin additionally outlines steerage on submitting Suspicious Activity Reports. Banks are required to file SARs underneath sure circumstances, reminiscent of upon observing a identified or suspected federal crime, however can voluntarily file SARs on suspicious transactions that may be related to a potential violation.
The OCC says that banks ought to now solely file a voluntary SAR “the place it identifies concrete suspicious exercise, reminiscent of exercise that would type the premise for submitting a SAR besides that it’s underneath the relevant threshold.”
“Banks are reminded that they need to not use voluntary SARs as a pretext to improperly disclose clients’ financial info or evade the [Right to Financial Privacy Act],” the OCC stated. “A financial institution ought to solely submit a voluntary SAR the place it identifies concrete suspicious exercise, reminiscent of exercise that would type the premise for submitting a SAR besides that it’s underneath the relevant threshold.”
