The FDIC is expecting financial institutions to assess risks presented by individual customers on a case-by-case basis
The Federal Deposit Insurance Corporation (FDIC) encouraged financial institutions to practice risk-based approach in evaluating individual customer relationships.
Doreen R. Eberly, director of risk management supervision division at FDIC urged insured depository institutions to recognize the significance of their services, and to serve their communities.
Eberly noted that individual customers present different degrees of risk. According to her, instead of declining them to offer banking services to broad categories of customers; insured depository institutions should weigh the risk presented and their ability to manage the risk.
“Financial Institutions that can properly manage customer relationships and effectively mitigate risks are neither prohibited nor discouraged from providing services to any category of customer accounts or individual customers operating in compliance with applicable state and federal law,” said Eberly.
FDIC is aware of the concerns of financial institutions
According to Eberly, the FDIC is aware about the hesitations of some institutions to provide certain types of banking services because of concerns that they might not comply with the Bank Secrecy Act (BSA)
She emphasized that the FDIC and other federal banking agencies recognize that fact that it is impossible for financial institutions to detect and report all illegal transactions that goes through institutions.
Eberly emphasized that “isolated or technical violations, which are limited instances of non-compliance with the BSA…generally do not prompt serious regulatory concern or reflect negatively on management’s supervision or commitment” to compliance with the law.
The FDIC believes that institutions with appropriate risk-based program and follows existing guidance are well-positioned to properly manage customer accounts. These institutions generally detect and deter illicit financial transactions, according to the agency.
FDIC expects institutions to assess individual customers on a case-by-case basis
According to the FDIC, financial institutions are expected to assess the risks presented by individual customers on a case-by-case basis. The agency also expected the institutions to implement controls to manage the relationship proportionate with the risks associated with every customer.
The United States Congress created the FDIC in 1993 to restore public confidence in the banking system of the country.
FDIC recently named a new general counsel
Earlier this month, the FDIC appointed Charles Yi as general counsel to supervise its legal division. Yi was a former staff director and chief counsel on the Senate Committee on Banking, Housing and Urban Affairs. He replaced Michael Krimminger who vacated the position on May 2012.