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Regulatory Insights

Upcoming rulemakings are distinguished by:

• “Big Rocks��. “Big Rock�� banking regulations expected to be finalized in 2024 include Basel III reforms, long-term debt requirements, resolution plans, and beneficial ownership reporting.
• Interagency Coordination. The banking regulators are coordinating across a variety of regulatory themes, including financial risk (capital and liquidity), fraud and financial crime, data (privacy, use, models), and risk management and governance.
• Data Rights & Transparency. Following the personal financial data rights proposal (CFPB 1033), a series of upcoming rules look to improve data protections and transparency, addressing data use in models, new standards for information reported to the agencies, and insurance signage requirements.
• AML/BSA/CDD/Beneficial Ownership. Multiple agencies to issue financial crime-related regulations, directed in large part by the Anti-Money Laundering Act of 2020 and the Corporate Transparency Act of 2020.

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December 2023

Looking ahead to 2024, federal agencies release their regulatory agendas for bank-related rulemaking and OCC issues its Semiannual Risk Perspectives Report.

Regulatory Agendas

The federal banking regulators release their Fall 2023 Regulatory Agendas (including the Federal Reserve Board (), Federal Deposit Insurance Corporation (), Office of the Comptroller of the Currency (), Consumer Financial Protection Bureau (), and the Financial Crimes Enforcement Network ()). Notable planned final and proposed rulemakings, as well as related ���㣨Leyu���������� Regulatory Insights thought leadership, include:

OCC Semi-Annual Risk Perspectives Report

In a separate release, the OCC published the Fall 2023 edition of its highlighting OCC’s view on key risks and issues facing the federal banking system. The OCC adds (in an accompanying ), that going forward, the agency “expects to remain diligent and adhere to prudent risk management practices across all risk areas�� and to “guard against complacency.”��

Key Risks. The OCC identifies trends in four key risk themes:

1. Credit risk, including commercial and retail credit.
2. Market risk, including rising deposit rates and competition for deposits, market liquidity contraction, and increased reliance on wholesale funding.
3. Operational risk, including cybersecurity, innovation and adoption of new technology/products/services, and increasing third party relationships.
4. Compliance risk, including risks associated with Bank Secrecy Act/Anti-Money Laundering (BSA/AML) and sanctions, Community Reinvestment Act (CRA)/fair lending and consumer compliance, and relationships with third parties, including fintechs.

Key Issues. The OCC highlights additional issues facing the federal banking system, including:  

• Climate-related financial risks, including expectations that banks�� efforts are focused on “key aspects�� of climate-related financial risk management as covered in the October 2023 final Interagency Principles for Climate-related Financial Risk Management for Large Institutions.  The OCC acknowledges that although banks have made progress to incorporate these risks into their risk management framework, they still have significant work to do in maturing their programs.
• Artificial Intelligence, identified as an “emerging risk�� based on banks�� increasing utilization of artificial intelligence (AI) and Generative AI technologies for various risk management and operational purposes, posing challenges in areas such as compliance, credit, reputational, and operational risk, (e.g., potential bias, privacy concerns, and errors/fraud). Banks are expected to “manage AI use in a safe, sound, and fair manner, commensurate with the materiality and complexity of the particular risk of the activity��.

See related ���㣨Leyu���������� Regulatory Insights materials:

• Point of View | Ten Key Regulatory Challenges of 2024
• Regulatory Alert |