U.S. Regulators Release Guidelines for Third-Party Risk Management in Banks

U.S. regulators have released proposed guidelines on third-party risk management for banks. The Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration stated that the proposal aims to help banks and credit unions better tailor their third-party risk management practices to match the risks associated with various third-party relationships. Federal Reserve staff noted that banks are increasingly outsourcing certain functions and relying on third-party relationships to enhance efficiency and reduce costs. The plan will be open for public comment, is non-binding, and aims to focus regulatory attention on a principles-based approach to such risks. Federal Reserve Governor Barr expressed opposition to the proposal, citing concerns over significant financial risk standards.