Matters Requiring Attention for Violations of Laws and Regulations: Notice of Proposed Rulemaking

Summary

The Office of the Comptroller of the Currency (OCC) issued a notice of proposed rulemaking to refine the standard for the issuance of matters requiring attention (MRA) in response to violations of laws and regulations (12 CFR 4.92). The proposed rule would establish two categories of violations: “substantive violations” and “technical violations.” The proposal is intended to focus the attention of national banks, federal savings associations, and federal branches and agencies (collectively, banks) and examiners on violations that could meaningfully impact a bank or its customers, while preserving an effective mechanism for addressing less significant violations.

Comments on all aspects of the proposed rule are due 30 days after it is published in the Federal Register.

Highlights

The proposed rule would

• clarify that the OCC may issue an MRA in response to a violation of a banking or banking-related law or regulation only for “substantive violations,” i.e., violations whose nature, duration, frequency, or severity could meaningfully impact the bank or its customers.
• establish that the OCC cites “technical violations” for violations for which the OCC does not take an enforcement action, or issue an MRA, to a bank.

Background

The OCC is responsible for assuring that banks under its jurisdiction comply with applicable laws and regulations. In furtherance of this responsibility, the OCC issued a notice of proposed rulemaking to refine its framework for the issuance of MRAs in response to violations of laws and regulations. The proposed revisions are intended to better focus supervisory attention on the violations that are the most critical to the prudent operation of a bank.

The Proposed Rule

Substantive Violations

Under the proposal, the OCC would limit the issuance of MRAs in response to a violation of a banking or banking-related law or regulation to only substantive violations. The proposal would deem a violation to be substantive if its nature, duration, frequency, or severity could meaningfully impact the bank or its customers. This general definition of the term “substantive violation” would be followed by five categories that provide more concrete parameters as to what qualifies as a substantive violation. A substantive violation would need to meet at least one of the following criteria for the OCC to issue an MRA:

• Be systemic, or constitute a pattern;
• Have had or reasonably be expected to have a direct, clear, predictable, and more than minimal impact on the bank’s financial condition;
• Have had or reasonably be expected to have a more than minimal impact on the accuracy of the bank’s books and records;
• Require more than minimal restitution or reasonably be expected to have a more than minimal adverse impact to customers; or
• Involve insider misconduct or self-dealing.

Technical Violations

The proposal would create a separate category for technical violations. A technical violation would be a violation for which the OCC does not take an enforcement action or issue an MRA. Examiners would be permitted to direct a bank to correct the violation but could not prescribe how the bank must do so or require remediation steps unrelated to correction of the violation.

Further Information

Please contact the Chief Counsel’s Office at (202) 649-5490.

Adam J. Cohen
Senior Deputy Comptroller and Chief Counsel

Related Link

• Violations of Laws or Regulations: Notice of Proposed Rulemaking (PDF)