2.4: Domestic and Foreign Banks

Promote compliance by domestic and foreign banking organizations supervised by the Federal Reserve with applicable laws, rules, regulations, policies, and guidelines through a comprehensive and effective supervision program.

Other Information:

This objective will be pursued in part through the following actions: • Enhance supervised institutions’ understanding of relevant rules and regulations and provide education and other resources to help them better manage their legal and reputational risk. • Promote System efforts to develop and implement a risk-focused framework for assessing the overall compliance risk in supervised institutions. Discussion: The evolution of the banking industry, the recent accounting-related scandals, the passage of the Sarbanes-Oxley Act and the USA Patriot Act, and recent anti-money laundering cases have further raised concerns about compliance, governance, conflicts of interest, and reputation risks. Promoting greater understanding and awareness by financial institutions of compliance risk—the risk that a financial institution will be harmed by its failure to comply with laws and regulations, prudent ethical standards, or contractual obligations—while also conducting more-intensive monitoring for adherence is an integral component of the supervision function’s risk-focused framework.

Indicator(s):

Indicator:1

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