Forward look: Banks will need to review and potentially revise their policies for handling law enforcement data requests to ensure compliance with the new OCC guidance and Trump’s debanking executive order.
Key insight: The OCC’s bulletin reflects a significant shift in regulatory approach, signaling that the Trump administration views previous bank cooperation with law enforcement after Jan. 6 as evidence of political debanking rather than legitimate compliance efforts.
What’s at stake: Banks face the challenge of balancing conflicting legal obligations under the Bank Secrecy Act, which requires sharing certain information with law enforcement, and the Right to Financial Privacy Act, which protects customer data from improper disclosure.
WASHINGTON — The Office of the Comptroller of the Currency told banks that they have an obligation to protect consumers’ financial privacy when law enforcement agencies demand data,
After the rioters on Jan. 6 broke into the U.S. Capitol building to try and forcefully disrupt the ratification of the 2020 presidential election, law enforcement agencies reached out to certain banks requesting data as part of their investigation, according to a
The OCC now issued a bulletin to “remind banks of their legal obligations to protect their customers’ financial records, “even if the request for information comes from government agencies. Banks have argued that these requests from law enforcement leave them between a rock and a hard place, trying to balance their requirement to share information under the Bank Secrecy Act and protect consumer information.
The report issued by the Judiciary Committee is an important example of a Congressional investigation that informs regulatory policy. The bulletin from the OCC shows that its new head, Jonthan Gould, is likely to tow the Trump administration line on pursuing consent orders and other actions on perceived political and religious debanking, as in the case of the Jan. 6 rioters.
The OCC bulletin tells banks to review the
The bulletin also outlines guidance on filing Suspicious Activity Reports. Banks are required to file SARs under certain circumstances, such as upon observing a known or suspected federal crime, but can voluntarily file SARs on suspicious transactions that might be relevant to a possible violation.
The OCC says that banks should now only file a voluntary SAR “where it identifies concrete suspicious activity, such as activity that could form the basis for filing a SAR except that it is under the applicable threshold.”
“Banks are reminded that they should not use voluntary SARs as a pretext to improperly disclose customers’ financial information or evade the [Right to Financial Privacy Act],” the OCC said. “A bank should only submit a voluntary SAR where it identifies concrete suspicious activity, such as activity that could form the basis for filing a SAR except that it is under the applicable threshold.”