Washington, D.C., June 6, 2023 – Today, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) jointly released final guidance aimed at assisting banking organizations in effectively managing risks associated with third-party relationships, including those with financial technology (fintech) companies.
The finalized guidance outlines principles and considerations for banking organizations to enhance their risk management practices related to third-party relationships. It provides comprehensive guidance throughout the entire life cycle of these relationships, including planning, due diligence and selection, contract negotiation, ongoing monitoring, and termination.
With a particular focus on community banks, the final guidance offers illustrative examples to help institutions align their risk management practices with the specific nature and risk profile of their third-party relationships. The regulatory agencies have also committed to engaging with community banks promptly and developing additional resources to support them in managing relevant third-party risks.
By replacing the existing general third-party guidance from each agency, the final guidance aims to promote consistency in the supervisory approaches adopted by the agencies regarding third-party risk management. It incorporates streamlined language and improved clarity, taking into account the feedback received from public comments on the proposed guidance, which was released in July 2021.
The guidance serves as a valuable tool for banking organizations to strengthen their risk management frameworks and ensure the prudent oversight of third-party relationships. By adopting these best practices, financial institutions can mitigate potential risks and safeguard the integrity and stability of the banking system.
For more information on the finalized guidance and its implications for banking organizations, please refer to the official release by the respective regulatory agencies.
About the Federal Bank Regulatory Agencies: The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency are key federal regulatory agencies overseeing the banking industry in the United States. These agencies work together to ensure the safety and soundness of the banking system, protect consumers, and promote fair and transparent financial markets.