INTERAGENCY STATEMENT ON RETAIL SALES OF NONDEPOSIT INVESTMENT PRODUCTS PDF
The “Interagency Statement on Retail Sales of Nondeposit Investment Products” ( dated February 15, ), formerly contained in section the OCC specifically incorporates the “Interagency Statement on Retail Sales of Nondeposit Investment Products” issued by the Federal. Sale of Uninsured Debt Obligations and Securities Issued by Bank Holding Interagency Statement on Retail Sales of Nondeposit Investment Products.
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On December 13,the Treasury Department and the Internal Revenue Service issued highly-anticipated proposed regulations regarding the base erosion and anti-abuse tax generally referred to as the “BEAT”. To the extent the bank has clients that may be vulnerable to a broker’s hard sell, the bank should have procedures in place to ensure that these customers are not sold inappropriate investments.
A bank’s failure to provide adequate resources and risk management to properly manage and control the risks associated with any RNDIP sales program may present a strategic risk to the bank. The OCC expects the compliance program to include periodic testing of customer accounts and transactions to detect, prevent, and correct abusive practices.
More clarity regarding specific OCC expectations and methods for implementing the guidance in the Booklet will be revealed through upcoming examination cycles. It is intended to provide guidance for bank examiners on activities of national banks and federal savings associations collectively, banks involved in recommending and selling nondeposit investment products to retail customers.
Although it was adopted almost 21 years ago, the Booklet demonstrates the Interagency Statement’s durability and continued relevance for bank RNDIP activities.
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In turn, the Booklet may serve as a useful compliance guide for banks other than national banks. Risk identification should be a continuous and ongoing process at the transactional, line of business, and aggregate business levels and should include risks that originate in broker-dealer subsidiaries or affiliates or through networking arrangements.
However, the Booklet identifies the rule as “an appropriate reference for a bank compliance program designed to ensure that the bank’s sales of RNDIPs are operated in a safe and sound manner. More from this Author. Reputation risk arises from the way a bank or a third party interacts with customers. Banks’ boards of directors must establish the banks’ strategic direction and risk tolerance with respect to any RNDIP sales program and communicate the same through policies and procedures that establish responsibility and authority.
The Booklet acknowledges that FINRA Rule regarding suitability of recommended products does not expressly apply to sales or recommendations made directly by a bank. Banks are also expected to identify cross-business-line interdependencies or issues that could present increased risk. Worldwide Europe European Union U. Third-party risk management Qualification and training requirements for bank personnel and supervisors, as well as third-party sales representatives who will recommend or sell RNDIPs Compensation arrangements that comply with applicable regulations GLBA, Regulation R, 12 C.
Blockchain Legal Resource Blog: What has changed, as the Booklet demonstrates, are the regulatory expectations with respect to the nature and strength of the compliance architecture required to manage a RNDIP sales program. At approximately pages, the Booklet is almost three times the length of the version.
Overall, the Booklet will be a useful reference tool for banks, broker-dealers, insurance agents, and registered investment advisers that engage in bank RNDIP sales programs as they modify and adjust their risk management of the RNDIP sales program.
More from this Firm. The Booklet refers to the Third-Party Relationship Bulletin numerous times and contains a detailed description of third-party risk-management expectations with respect to RNDIP sales, including no regarding risk assessment by a bank’s board and management, the due diligence process, and the written agreement invewtment and reporting obligations of the third-party broker-dealer.
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The OCC Booklet explicitly notes that banks that offer services to lower-income clients, clients with little to no investment experience, or seniors may present heightened reputation risk. The Booklet also strongly encourages using mystery shopping and call-back programs to test sales programs and ensure that sales activities comply with applicable regulations, guidance, and a bank’s policies. The Booklet contains extensive discussion about permissible compensation arrangements and referral fees.
Risk-Management Program The OCC expects each bank to “identify, measure, monitor, and control risk by implementing an effective risk management system appropriate for its size and the complexity of its operations. In news that no Blockchain Monitor reader wants to hear, technical analysts are sounding the alarm bell on bitcoin. Do you have a Question or Comment? The Interagency Statement is still alive and well: Overall, the Booklet reflects the OCC’s increasing invfstment in recent years on the need for banks to implement strong risk-management processes and policies commensurate with their activities, as well as oversight of these activities by senior bank management and banks’ boards of directors.
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News About this Firm. Retail foreign exchange transactions also present counterparty credit risk where a bank acts as principal in producs transaction.
Food, Drugs, Healthcare, Life Sciences. The OCC states that the Booklet itself is intended to explain “the risks inherent in banks’ retail nondeposit investment product RNDIP sales programs and provide a framework for banks to manage those risks.
Insurance Laws and Products.
Banks should pay particular attention to the guidance and expectations regarding disclosures and advertising because those aspects of compliance are easily reviewed and tested by examiners. Compensation arrangements and referral fees: There are several aspects of the Booklet that are particularly noteworthy or warrant special mention.
These requirements are extensive and unlikely to be satisfied with existing networking arrangements. Real Estate and Construction.
The Booklet details the OCC’s new expectations of third parties that provide RNDIPs through bank distribution channels and focuses on the terms to be contained in networking agreements with banks. As noted above, these requirements are to be addressed by new networking agreement terms. Mine Financing In – Video.