OCC to make changes to examiner regime

Chris Hamblin

Clearview Publishing

2 June 2014

The US Office of the Comptroller of the Currency, which somehow survived revelations about its complicity in the HSBC scandal that resulted in a fine of $1.9 billion in December 2012, is making some adjustments to its in-house examination regime. It supervises each of the largest US financial institutions under a so-called 'continuous examination programme' akin to a never-ending regulatory visit. The OCC has recently stated that it will cease to embed any 'examiner' at any one bank for more than five years before moving him on, perhaps as a way of saying sorry for the conduct of its teams in the past which historians, at best, attribute to sleepy incompetence. It will also cut the number of 'embedded' examiners, presumably moving them into its own offices.

A press release states: “To strengthen its supervisory process, the OCC will expand the organization, functions, and responsibilities of its large bank lead expert program to improve horizontal perspective and analysis, systemic risk identification, quality control and assurance, and resource prioritization. To strengthen the examining force, the OCC will establish a formal rotation program for all examiners to provide them with broader, fresh perspectives on a regular basis.”

Two OCC examiners famously sat through one of the most prolific drug-laundries of all time for two years at the global private banking giant's New York office. Despite the humiliating failures of the American regulatory system, however, the words 'examination' and 'programme' have started to creep into the UK Financial Conduct Authority's lexicon.

The OCC has nonetheless come in for much official opprobrium. In the words of a senatorial report on HSBC: "The current OCC system has tolerated severe AML deficiencies for years, permitted national banks to delay or avoid correcting identified problems, and allowed smaller AML issues to accumulate into a massive problem before...enforcement action."

At HBUS, the OCC identified 83 'matters requiring attention' over five years, without once alleging that someone had broken federal anti-money-laundering law.