Changes to Data Collection for OCC’s Money Laundering Risk Management System | Ballard Spahr LLP


On September 8, the Office of the Comptroller of the Currency (“OCC”) posted an extension to their review and request for feedback (the “Notice”) in the Federal Register regarding changes to the OCC Money Laundering Risk System (the “MLR System”). The notice states that the OCC urges closer scrutiny of customers and transactions involving cryptocurrency, cannabis, and (fiat) currency.

The MLR system is a data collection process, whereby the OCC collects and analyzes data on an annual basis from the community banks it oversees. This annual survey, known as the Risk Summary Form (“RSF”), gathers information for the MLR system on four main community banking data points: products, services, customers and geographies ( collectively referred to as “PSC”).

This year, the OCC is making changes to the MLR system by adding new CSP categories and removing some existing categories. Six new PSCs will be added: cash transactions, marijuana-related businesses, ATM operators, and three types of crypto assets: custody, stablecoin issuance, and stablecoin payouts. In addition, two new types of customers will be added in the “money transmitter” category: administrators/virtual currency exchangers and crypto-automaton operators. Finally, the following four categories will be removed from existing PSCs: Ship/Aircraft, Bulk Cash/Currency Repatriation Clients, Bulk Cash/Currency Repatriation, and International Branches. The complete and long list of CSP categories, including the changes proposed by the notice, can be consulted here.

Additions aim to improve OCC’s data collection process to more accurately reflect risks posed to community banks – and focus on marijuana and crypto-related transactions aligns with market trends as well as the enforcement priorities of many government agencies. These changes show how the OCC, an agency that has apprehended to make sweeping changes in light of new technologies – prepares to invest in a system that will bring cannabis and crypto risks to the forefront.

Only one of the newly added categories – cash transactions – is not directly related to marijuana or crypto. By removing the more targeted categories “bulk cash/currency repatriation customers” and “bulk cash/bulk currency repatriation” and replacing them with the more general category “cash transaction”, it appears that the ‘OCC intends to broaden the control associated with cash transactions. transactions. It is possible that a broader category will make it easier for community banks to report data, since the RSF is fully automated and contains fixed categories that cannot be changed to suit nuanced circumstances.

The OCC promotes its MLR system as an essential tool to identify risk areas within its covered institutions and respond accordingly by allocating appropriate resources to high risk areas. According to the OCC,[b]Banks will benefit from reporting data from the MLR system as it will aid in the management of the bank’s BSA/AML programs and provide a starting point for banks to develop their risk assessments. The OCC further believes that collecting annual data gives it the flexibility to alter examination priorities based on the ever-changing money laundering patterns facing community banks. According to the notice, the OCC estimates that the annual MLR system data reporting load will be 7,760 hours, for 970 respondents.

However, not everyone agrees with the OCC’s view that these changes to the MLR system are worth it. It should be noted that the OCC originally published this notice and requested comment in June. In response, the OCC received only three comments from the public, one of which was a critical response from a banking organization. The banking association mainly criticized the OCC for underestimating the time and resources needed to adhere to the proposed changes to the MLR system. According to the notice, which cited the critical response, the banking association also claimed that the additional PSCs would “unnecessarily complicate the data collection process, require significant retraining of staff and potentially lead to PSC categorization errors.”

Over the coming weeks, the OCC will be accepting feedback regarding the MLR system and its data collection process in general, including: the accuracy of the OCC’s estimate of the information collection burden, the ways to improve the quality and clarity of the information to be collected. , ways to minimize the burden of collection on respondents, estimates of the costs of purchasing services that facilitate the provision of the information, and (perhaps most importantly) whether collection of the information is necessary to the proper execution of the functions of the OCC.

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