Three federal agencies jointly issued a guidance that banks are expected to monitor their financial technology partners to ensure compliance with privacy, fair lending, and anti-money laundering laws.<\/p>\n
The \u201cInteragency Guidance on Third-Party: Risk Management\u201d was issued jointly by: (1) Board of the Federal Reserve System [OP-1752], (2) Department of the Treasury Office of the Comptroller of the Currency [OCC-2021-0011], and (3) Federal Deposit Insurance Corporation [RIN 3064-ZA26], with a final guidance date of June 6, 2023 (\u201cGuidance\u201d).\u00a0 The Guidance offers the three U.S. agencies\u2019 views on sound risk management principles for banking organizations when developing and implementing risk management practices for all stages in the life cycle of third-party relationships.<\/p>\n
Prior guidance is rescinded and replaced by the Guidance <\/u><\/p>\n
The Guidance rescinds and replaces the following previously issued guidance by the three federal agencies:<\/p>\n
The Guidance seeks to establish a consistent approach which puts the onus on banks to obtain information from and ensure compliance from its third-party fintech relationships.\u00a0 In other words, banks are responsible for knowing how their fintech partners: (1) are operating and (2) are complying with applicable federal law.<\/p>\n
Obligations concerning privacy laws and cross-border flow of information\u00a0 <\/u><\/p>\n
The Guidance discusses factors to consider when evaluating whether to enter into a relationship with a third party, including the compliance of privacy laws.\u00a0 Regarding contracts between a bank and a foreign-based third party, the Guidance notes the importance of:<\/p>\n
In sum, the 68-page Guidance sets forth a bank\u2019s risk management obligations when contracting with third-party fintech.\u00a0 As privacy laws and cross-border flow of information continually increase, the Guidance sets forth the criteria to analyze within these contracts.<\/p>\n
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Three federal agencies jointly issued a guidance that banks are expected to monitor their financial technology partners to ensure compliance with privacy, fair lending, and anti-money laundering laws. The \u201cInteragency Guidance on Third-Party: Risk Management\u201d was issued jointly by: (1) Board of the Federal Reserve System [OP-1752], (2) Department of the Treasury Office of the … <\/p>\n