This blog post provides an overview of the basic requirements and key considerations for institutions applying for a national trust charter with the OCC.

Interest in national trust bank charters has surged in recent years, with the Office of the Comptroller of the Currency (OCC) processing a number of charter applications from companies seeking to offer fiduciary, custody, and related trust services under a federal charter framework. From payroll-focused trust banks to digital asset custodians, the national trust charter has become an increasingly attractive option for institutions that want to operate under federal supervision without necessarily obtaining FDIC deposit insurance.

What Is a National Trust Bank?

A national trust bank (NTB) is a national bank whose operations are limited to those of a trust company and activities related thereto. Traditional services offered by NTBs include personal trust and estate administration, retirement plan services, investment management and advisory activities, corporate trust administration, custody and safekeeping, and cash management. Most NTBs do not offer loans or accept deposits and are not FDIC-insured.

In February 2026, the OCC issued a final rule amending 12 CFR 5.20 to clarify that national trust banks may engage in non-fiduciary activities in addition to fiduciary activities, so long as those activities fall within the “operations of a trust company and activities related thereto.” This rule, effective April 1, 2026, aligned the regulatory text with the OCC’s longstanding statutory authority without expanding or contracting the OCC’s chartering power.

The Chartering Process at a Glance

The OCC’s chartering process for NTBs generally follows these stages:

1. Prefiling: Organizers are encouraged to consult with the OCC’s licensing staff early in the process to discuss the proposal and identify potential issues before filing a formal application.
2. Application Filing: Organizers file a charter application under Sections 21, 24(Seventh), and 92a of the National Bank Act and 12 CFR 5.20, along with a request for fiduciary powers under 12 USC 92a and 12 CFR 5.26. While a separate fiduciary powers application is not required for a trust-only charter, the charter application should address all information outlined in both the charter and fiduciary powers application forms.
3. Preliminary Conditional Approval: If the OCC determines the proposal meets regulatory and policy requirements, it grants preliminary conditional approval—typically subject to specific conditions.
4. Organization Phase: The organizers establish the bank’s corporate existence and complete all preopening requirements, including a preopening examination by the OCC.
5. Final Approval: The OCC grants final approval and authorization to open only after all preopening requirements have been satisfied.

Business Plans: A Critical Component

Business plan is the centerpiece of any charter application. According to the OCC’s Comptroller’s Licensing Manual, the plan must adequately address regulatory and policy considerations and must:

• Demonstrate the organizing group’s collective ability to establish and operate a successful bank in the economic and competitive conditions of the market to be served.
• Articulate the risks of the proposed operation and the policies, processes, personnel, and control systems that the bank will use to monitor and control those risks.
• Include detailed financial projections, analysis of risk, and planned risk management systems and controls.

Capital and Liquidity Requirements

Capital and liquidity requirements for NTBs are tailored to each institution and are set as conditions of the charter approval. While NTBs are subject to the minimum leverage and risk-based capital ratios in 12 CFR Part 3, the OCC recognizes that these ratios are generally not optimal measures of capital adequacy for trust banks because off-balance-sheet asset management activities are not captured in the capital ratio calculations. Accordingly, the OCC ordinarily requires a higher level of capital than the standard ratios.

NTBs are also required by 12 USC 92a(i) to have initial capital and surplus not less than the capital and surplus required of state banks offering similar services in the state where the trust bank is located.

In practice, recent conditional approvals illustrate the range. For example, initial paid-in capital requirements have ranged from $7 million (Paycom National Trust Bank, 2024) to $10 million (UKG National Trust Bank, 2026), with ongoing tier 1 capital minimums of $5 million to $7 million. The OCC typically also requires that a significant portion of tier 1 capital be held in “Eligible Liquid Assets,” along with a separate requirement to maintain liquid assets sufficient to cover at least 180 days of operating expenses.

The OCC expects that capital and liquidity will increase beyond these initial minimums as the size, complexity, and risks of the NTB’s activities evolve over time.

Management and Governance

The OCC evaluates the qualifications of all proposed organizers, directors, and executive officers. Background investigations, including submission of fingerprints, are required. The OCC expects that the organizing group brings relevant experience in banking, fiduciary services, risk management, and compliance.

During the first two to three years of operation, NTBs are generally required to obtain the OCC’s prior written determination of no objection before appointing any new senior executive officers or board members. Similarly, any significant deviation from the approved business plan during this period requires advance notice and OCC no-objection.

Information Technology and Security

Before the OCC will grant final charter approval, the NTB must submit for review a complete description of its information systems architecture, its IT risk assessment and management plan, and its information security program. The security program must comply with the Interagency Guidelines Establishing Standards for Safeguarding Customer Information under 12 CFR 30, Appendix B. An independent review of the bank’s security measures, including firewall implementation and testing, is also required.

BSA/AML and Compliance Obligations

Like all national banks, NTBs must maintain a robust BSA/AML program that meets the requirements of 12 CFR 21.21. The OCC also expects trust banks to establish comprehensive compliance policies, insider policies, and internal and external audit frameworks prior to opening.

Key Timing Considerations

Organizers should be mindful of two important deadlines typically imposed as conditions of preliminary approval:

• Capital must be raised within 12 months of preliminary conditional approval.
• The bank must open for business within 18 months of that date.

If either deadline is missed, the approval expires. The OCC has indicated it is generally opposed to granting extensions except under the most extenuating circumstances.

Checklist: Key Steps and Documents

The following checklist summarizes the major steps and documents prospective applicants should have in hand or underway before and during the chartering process:

Pre-Application

• Schedule a prefiling meeting with the OCC’s licensing staff to discuss the proposal and identify potential issues
• Review the OCC’s Comptroller’s Licensing Manual – Charters booklet and the Charter Application form
• Identify and vet proposed organizers, directors, and executive officers; begin background investigation paperwork and fingerprint submissions

Application Package

• Completed Charter Application (covering both charter and fiduciary powers information)
• Detailed business plan with financial projections, risk analysis, and description of risk management systems and controls
• Capital and liquidity plan, including proposed initial paid-in capital, ongoing tier 1 capital minimums, eligible liquid asset targets, and 180-day operating expense liquidity reserve
• Biographical and financial information for all proposed organizers, directors, and officers
• Proposed Articles of Association and Organization Certificate

Organization Phase (Post-Preliminary Approval)

• Raise initial paid-in capital within 12 months of preliminary conditional approval
• Submit IT systems architecture, risk assessment, and management plan for OCC review
• Implement an information security program compliant with 12 CFR 30, Appendix B, and complete an independent security review
• Establish BSA/AML program (12 CFR 21.21), compliance policies, insider policies, and internal/external audit frameworks
• Complete preopening examination and satisfy all remaining OCC conditions
• Open for business within 18 months of preliminary conditional approval

DM Tips: For organizations considering a national trust charter, the following steps can help position an application for success:

• Engage early with the OCC’s licensing staff to discuss your proposal and surface potential issues before filing.
• Develop a detailed, risk-focused business plan that includes financial projections, a capital and liquidity analysis, and a description of the risk management systems and controls your institution will employ.
• Ensure adequate capitalization tailored to the scope and complexity of your proposed operations, and plan for capital and liquidity to grow as your activities scale.
• Assemble a qualified management team with demonstrated experience in banking, fiduciary services, and compliance, and begin background investigations early.
• Build out IT infrastructure and security programs well in advance, as the OCC will require a complete systems review and independent security assessment before granting final approval.
• Establish BSA/AML and compliance frameworks from the outset to satisfy preopening examination requirements.
• A well-prepared application remains the foundation for a successful charter process.

Reach out to us if you’re considering a National Trust Bank charter to dig deeper on the process, expectations, and timing.

On September 3, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued Alert FIN-2026-Alert 005, urging financial institutions to be vigilant in detecting, identifying, and reporting suspicious activity connected to digital asset investment scam centers and the laundering of their illicit proceeds. The Alert builds on FinCEN’s September 2023 guidance on digital asset investment scams and reflects the growing scale and sophistication of this threat.

A Rapidly Growing Threat

The numbers are staggering. According to the FBI’s Internet Crime Complaint Center, reported U.S. victim losses from digital asset investment scams have surged from $907 million in 2021 to $7.2 billion in 2025. Total annual revenue collected by Southeast Asian scam centers is estimated in the tens of billions of dollars. These operations are predominantly run by transnational criminal organizations (TCOs) based in Southeast Asia—primarily in Cambodia, Burma, and Laos—with operations now expanding into South Asia, the Pacific Islands, Africa, the Middle East, and South America.

The Alert arrives on the heels of Executive Order 14390, issued by President Trump on March 6, 2026, declaring it the policy of the United States to protect Americans from cybercrime, fraud, and predatory schemes.

How the Scams Work

Scam center operators use a range of fraud schemes—including investment, romance, and government impersonation scams—to induce victims to make payments, often in digital assets. Scammers commonly initiate contact through social media or text messages and exploit enthusiasm around new technologies, including digital assets and artificial intelligence, to lure victims with the promise of outsized returns. TCOs have also adopted AI tools to scale and refine their schemes.

A human trafficking dimension makes these operations especially disturbing: criminal gangs have trafficked hundreds of thousands of people to scam centers, where victims have their passports confiscated and are coerced into perpetrating online fraud.

The Laundering Ecosystem: Guarantee Marketplaces

The Alert devotes significant attention to “guarantee marketplaces”—online marketplaces operating as networks of Chinese-language chat groups on social connection platforms like Telegram. These marketplaces function as marketing venues, payment infrastructure, and trusted intermediaries between buyers and sellers of illicit services, including money laundering, social media account creation, and mass phishing services.

FinCEN highlighted its October 2025 final rule severing Cambodia-based Huione Group from the U.S. financial system, noting that Huione Group laundered at least $4 billion in illicit proceeds between August 2021 and January 2025. In June 2026, FinCEN proposed expanding that rule to cover Huione Group’s successor entities attempting to circumvent the original measure.

Key Red Flags for Financial Institutions

FinCEN identified 16 specific red flags to help financial institutions detect suspicious activity relevant for this Alert, including but not limited to:

• Victim payment indicators, such as customers stating they were directed by purported law enforcement to make payments in digital assets, precious metals, or gift cards.
• Guarantee marketplace indicators, such as transactions involving tokens issued by or associated with a guarantee marketplace, or blockchain analysis revealing links to known marketplace infrastructure.
• Laundering technique indicators, such as stablecoin transactions originating from U.S.-based exchanges that undergo on-chain laundering patterns, or customers transacting through stablecoins whose issuers advertise they do not cooperate with law enforcement.

SAR Filing Guidance

Financial institutions are requested to reference the Alert in SAR filings by including the key term “FIN-2026-SCAMCENTERS” in SAR field 2 and the narrative, and by selecting “Fraud-Other” under SAR field 34(z) with the description “Scam Centers”. FinCEN also encourages institutions to include relevant technical cyber indicators—such as chat logs, phone numbers, digital asset addresses, and suspicious URLs—in SAR submissions.

The Bottom Line

In light of this Alert, financial institutions should consider the following actionable steps:

• Update transaction monitoring rules to incorporate the specific red flags identified in the Alert, including indicators related to victim payments, guarantee marketplace activity, and on-chain laundering techniques.
• Train frontline and compliance staff to recognize the hallmarks of digital asset investment scams, including customers who report being directed by purported government officials to make payments in digital assets or precious metals.
• Review SAR filing procedures to ensure staff include the key term “FIN-2026-SCAMCENTERS” in SAR field 2 and the narrative, and select “Fraud-Other” under SAR field 34(z) with the description “Scam Centers.”
• Leverage Section 314(b) information sharing with other financial institutions to identify repeat actors moving across institutions to evade detection.
• Enhance due diligence on MSBs and digital asset service providers, particularly those operating in or connected to Southeast Asia, and monitor for entities that appear to obscure their location or corporate structure.
• Refer potential victims to the FBI’s IC3 at ic3.gov or the nearest U.S. Secret Service field office.

* Note: All references to specific reports, rules, alerts, and figures used in this blog posting can be found linked in the FinCEN Alert if not linked directly herein.

Service contracts between banks and their parent holding companies frequently include indemnification clauses. A common arrangement is for the bank to indemnify its parent for losses caused by the bank’s own negligence or willful misconduct. Does this create a covered transaction?

The answer is no. When a bank indemnifies its parent holding company in a service contract for holding company losses caused by the negligence or willful misconduct of the bank, this does not constitute a covered transaction under Regulation W.

The rationale is that such indemnification clauses are standard commercial terms that reflect the bank’s responsibility for its own actions. The bank is not assuming the affiliate’s risk or extending credit to the affiliate; rather, it is agreeing to make the affiliate whole for damages the bank itself caused. This is more akin to tort liability than to the types of financial transactions Regulation W is designed to restrict.

Under Section 23A, covered transactions include extensions of credit, asset purchases, guarantees, and similar transactions where the bank’s resources are exposed to affiliate risk. An indemnification for the bank’s own misconduct does not fit this framework because the risk originates with the bank, not the affiliate.

DM Tip: When drafting service agreements with affiliates, clearly limit indemnification to losses caused by the bank’s own negligence or willful misconduct. Broader indemnification clauses that cover affiliate losses regardless of fault could be viewed differently and may trigger Regulation W analysis.

Not every transaction between a bank and its affiliate is a covered transaction under Regulation W. A notable exception is that an affiliate’s purchase of stock issued by the bank is not a covered transaction.

This makes sense from a policy perspective. The purpose of Section 23A and Regulation W is to protect the bank from losses arising from affiliate transactions. When an affiliate purchases the bank’s stock, the bank is receiving capital, not extending resources to the affiliate. The transaction strengthens the bank rather than exposing it to credit or counterparty risk from the affiliate.

This means that a holding company can invest additional equity capital in its subsidiary bank without triggering Regulation W’s quantitative limits, collateral requirements, or other restrictions. Similarly, other affiliates may purchase the bank’s stock or subordinated debt that constitutes equity capital without those purchases counting as covered transactions.

However, banks should note that while the affiliate’s purchase of bank stock is not a covered transaction, the reverse may be. If a bank purchases securities issued by an affiliate, that is a covered transaction subject to all Regulation W requirements.

DM Tip: When structuring capital injections from affiliates, confirm that the transaction involves the affiliate purchasing the bank’s stock (not a covered transaction) rather than the bank investing in affiliate securities (which would be a covered transaction). Document the direction of the capital flow clearly.

While a sole proprietorship is not a company under Regulation W, the analysis is different for trusts established for a business purpose. An ESOP, pension plan, or other business trust qualifies as a “company” for purposes of Regulation W.

This means that if a business trust meets the definition of an affiliate under 12 CFR 223.2, perhaps because it is controlled by the bank’s holding company or because it meets another affiliation criterion, transactions between the member bank and that trust are covered transactions subject to all Regulation W requirements.

This distinction matters particularly in the holding company context, where parent companies frequently establish ESOPs, pension trusts, or special-purpose trusts that hold bank stock or other assets. If such a trust is controlled by an entity that also controls the member bank, the trust is an affiliate, and any extension of credit from the bank to the trust, or any asset purchase, triggers Regulation W compliance obligations.

The key takeaway is that legal form matters under Regulation W. The trust structure, which creates a separate legal entity with its own assets and obligations, is sufficient to qualify as a company, unlike a sole proprietorship where no separate entity exists.

DM Tip: Inventory all trusts in your holding company structure, including ESOPs, pension trusts, and special-purpose vehicles. Do any of them qualify as an affiliate? If so, ensure all transactions with affiliated trusts are captured in your Regulation W monitoring system.

The anti-tying provisions of 12 U.S.C. § 1972 are among the most significant restrictions governing how banks market and price their products. Generally, a bank may not condition the availability or pricing of one product on a customer’s purchase of another product. However, the combined-balance discount exception provides meaningful flexibility for banks seeking to reward full-relationship customers.

Safe Harbor for Combined Balances

Under 12 CFR 225.7(b)(2), a bank may condition product availability or pricing on a customer obtaining a “loan, discount, deposit, or trust service.” The Federal Reserve has identified 20 categories of qualifying services, including but not limited to:

• All types of extensions of credit, letters of credit, and financial guarantees
• All forms of deposit accounts, safe deposit box services, and escrow services
• Cash management, payroll, and payment/settlement services
• Fiduciary, custody, and transfer agent services
• Credit card and merchant processing services
• Remote/mobile deposit capture and deposit sweep services

Expanded Definition of “Customer”

For combined-balance discount purposes, “customer” may include not only the natural person but also any members of that person’s “immediate family” (as defined in 12 CFR 225.41(b)(3)) who reside at the same address. This allows household-level product bundling. Additionally, financial products including insurance products may count toward the combined balance.

This exception offers banks significant latitude to design relationship-based pricing programs, but careful documentation is essential to demonstrate compliance.

DM Tip: Review your product bundling and discount programs to ensure they fall within the safe harbor. Document which products count toward combined balances and maintain records showing that household-level aggregation is limited to immediate family members residing at the same address.

Bank holding companies (“BHCs”) have the ability to hold equity stakes in portfolio companies through multiple legal authorities. A common question under Regulation W arises when a BHC owns shares of a portfolio company under both the merchant banking authority of Section 4(k)(4)(H) or (I) of the Bank Holding Company Act and under Section 4(c)(6) of the BHC Act. Does this combination trigger the presumption of affiliation?

The answer is yes – here’s why. Section 223.2(a)(9)(i) of Regulation W creates a presumption of affiliation when certain ownership thresholds are met. The key is that a BHC may not own any shares in reliance on Section 4(c)(6) if it owns or controls, in the aggregate under a combination of authorities, more than 5 percent of any class of voting securities of the company.

In an example provided by the Federal Reserve, a BHC owns 12 percent of equity capital and voting stock under the merchant banking authority plus 4 percent under Section 4(c)(6). Because the aggregate exceeds 5 percent across combined authorities, the presumption of affiliation is triggered.

This has real consequences: if the portfolio company is deemed an affiliate, any transaction between it and the subsidiary bank becomes a covered transaction subject to Regulation W’s full suite of restrictions.

DM Tip: When your BHC acquires portfolio company interests under multiple BHC authorities, aggregate all holdings across all authorities before evaluating whether the Regulation W affiliation presumption is triggered. Reach out for support.

“Closely Related to Banking”

Bank holding companies seeking to diversify revenue streams beyond traditional lending and deposit-taking have a surprisingly broad menu of permissible nonbanking activities available under Regulation Y. The Federal Reserve has approved a range of activities as “closely related to banking” under 12 CFR 225.28, often subject to specific conditions and limitations. In this post, we explore a few very specific permissible nonbanking activities previously approved by the Federal Reserve.

Commodity Transactions

Volumetric Production Payment (VPP) transactions for financing purposes are permissible under 12 CFR 225.28(b)(1) when certain conditions and risk-management requirements are met. Similarly, two “commodity purchase and forward sale” (CPFS) structures have been approved as permissible lending transactions, subject to conditions including: the BHC holds title only via warehouse receipt, the commodity is not physically moved, the BHC earns a fixed return, and risk exposure is limited to counterparty credit risk.

Real Estate and Credit-Related Services

Flood zone determination services are permissible as activities related to extending credit under 12 CFR 225.28(b)(2), though services to non-lenders are subject to limitations. Section 1031 exchange services have been approved as a combination of real estate settlement services, trust company functions, and financial advisory services — but the subsidiary may NOT negotiate property sale or purchase terms or help find buyers or sellers.

Minority Investments Under Section 4(c)(6)

Under section 4(c)(6) of the BHC Act, BHCs may invest in companies engaged in commercial or industrial activities, subject to limitations: up to 5% of any class of voting securities, and the investment must be noncontrolling. Notably, multiple BHCs may jointly invest in a clearing or settlement company even if they collectively own more than 50% of the stock.

DM Tip: Banks exploring revenue-generating nonbanking activities should maintain robust legal review processes and consider consulting with Federal Reserve staff early when structuring novel transactions. Contact your Duane Morris attorney for support and guidance.