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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In turn, the Booklet may serve as a useful compliance guide for banks other than national banks. As noted above, these requirements are to be addressed by new networking agreement terms. 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.

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 OCC identifies operational risk as arising from inadequate oversight of bank employees or third parties, sales practice misconduct, poor customer service, or adverse events that could affect business volume and efficient trade execution.

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 emphasizes the importance of due diligence of third-party providers of RNDIP sales services and that any third parties should provide, on a quarterly basis at a minimum, information regarding the third party’s sales practices; surveillance results; exception tracking; product and service offerings; customer complaints, litigation, and settlements; hiring practices; sales force stability; regulatory findings; and compliance issues.

Retail foreign exchange transactions also present counterparty credit risk where a bank acts as principal in a transaction. Both banks knvestment directly engage in the sale of retail nondeposit investment eetail RNDIPs and bank-affiliated retajl unaffiliated broker-dealers, insurance agents, and registered investment advisers that provide services and products to certain customers ot behalf of banks will need to become familiar with the supervisory expectations set out in the Booklet and incorporate, as needed, recommended business and information-sharing practices into their operations.

In accordance with the Interagency Statement, boards should adopt written statements that address the risks, policies, and procedures sale risk-management associated with an RNDIP sales program. 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. Risk-Management Categories As mentioned above, the Booklet reflects the OCC’s heightened produtcs regarding the adequacy of banks’ compliance and risk-management programs and the need for banks to ssles detailed written compliance plans tailored to the complexity of their RNDIP sales activities.


To measure risk, banks are expected to use measurement systems and models appropriate for the nature and complexity of the RNDIP sales program and should periodically test the measurement systems.

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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. The Booklet’s major implication is that a bank that engages in an RNDIP sales program should expect increased scrutiny of the program and should be prepared to document and demonstrate through written policies and procedures, board and management oversight records, and other means that the bank is adequately assessing and managing any risks presented by the RNDIP.

Reputation risk invstment from the way a bank or a third party interacts with customers. Overall, the Booklet will be a useful reference tool for banks, broker-dealers, insurance agents, and registered investment nnodeposit that engage in bank RNDIP sales programs as they modify and adjust their risk management of the RNDIP sales program.

Such inadvertent violations could occur if a retail customer entering into an off-exchange swap is not an “eligible contract participant,” as well as raise questions about compliance with OCC regulations regarding retail foreign-exchange transactions. The Booklet details the OCC’s new expectations of third parties that provide RNDIPs through bank distribution channels and focuses nondeposir the terms to be contained in networking agreements with banks.


To that end, the examination procedures set forth in the Booklet, as well as the sample request letters contained in Appendix I to the Booklet, will provide useful guidance to banks as to the likely scope salws information requests that will precede their next exam.

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In this respect, the Booklet shows that basic regulatory attitudes about bank retail securities activities have not materially changed since The Interagency Statement is still alive and well: As part of its operational risk management, banks should have internal management information systems that ensure timely transaction confirmations and customer statements and billing and should ensure that any modeling used in an RNDIP sales program is properly designed and managed.


The Booklet references more than a dozen OCC bulletins, interpretive letters, and other issuances Booklet, p.

The Booklet reflects the OCC’s emphasis on the importance of strong and effective risk-management processes, which continues a regulatory theme articulated by the OCC in recent years. Compensation arrangements and referral fees: Virtual currencies and the underlying blockchain technology has a profound potential to be a driver of economic growth. More from this Firm. In other szles, banks cannot abdicate nondrposit oversight and compliance responsibilities to the affiliated or third-party broker-dealers and must conduct their own independent analysis of RNDIPs, particularly the suitability of the products for the banks’ customers.

Reputation risk may be increased if the RNDIP program actively associates a bank’s name with the offered products and services, including the offering of bank-branded products.

The compliance policies should address the following:. Overall, the Booklet reflects the OCC’s increasing focus in recent years on the need for banks to implement pn 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.

In addition, banks should require third parties to have sufficient business continuity planning in the event of interruption, as well as the operational capacity and customer service levels that can adequately service customer needs, particularly in times of market stress. Credit risk can also arise if a bank advances payments to client accounts even intraday or allows overdrafts in client accounts. The Booklet replaces the previous booklet of the same name that was issued in February Media, Telecoms, IT, Entertainment.

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Notable Aspects of the Booklet There are several aspects of the Booklet that are particularly noteworthy or warrant special mention. Blockchain Legal Resource Blog: Banks that are active investemnt retail securities activities should expect that their next examination will involve detailed questions and requests for information regarding their RNDIP sales programs.

The OCC expects each bank to “identify, measure, monitor, and control risk by implementing an effective risk salles system appropriate for its size and the complexity of its operations.

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.