OCC Updated Its Policies and Procedures Regarding Violations of Laws and Regulations

On May 23, 2017, the OCC issued a bulletin providing updated guidance to national banks, including community banks, concerning changes to OCC’s policies and procedures regarding violations of laws and regulations. This updated guidance is effective July 1, 2017.

The new guidance goals are to: (i) standardize a process for communication, racking and resolution of violation of laws and regulations detected in the course of examination or self-identified by the bank; (ii) ensure that the OCC analyzes the volume and trends of regulatory violations and determine whether regulatory risks are changing; and (iii) use consistent terms and monitoring of lines of business.

Under the new guidance, examiners must communicate all violations of laws and regulations to bank’s board and management. The guidance prescribe method for communicating substantive violation, through reports of examination (“ROE”) or supervisory letter, and provides discretion to examiners on how to communicate less substantive, self-identified violations, e.g. through separate written letter if not included in the ROE or supervisory letter.

The OCC expects the bank’s board and management to take timely and effective corrective action. If management fails to correct a previously communicated violation in a separate written document, examiners should include the violation in the next ROE or supervisory letter.

In communicating violations, examiners are required to label violations as either “New”, “Self-identified” or “Repeat”. Examiners are required to conduct follow up activities to determine whether corrective action of the violation is “past due”, “pending validation” or “closed”.

For more information, see OCC Bulletin 2017-18.


The new guidance requirement may result in an increase in reporting of violations of laws and regulations by examiners. To avoid less substantive violation from being reported in ROE or supervisory letter and potentially affecting the bank’s CAMELS/ITCC or ROCA ratings, a bank should take a similar approach to resolving less substantive violations as it takes to resolving substantive violations.


  • Solomon Maman

    Solomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.