Proposed Rule2026-17822
Violations of Laws or Regulations
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 1, 2026
Issuing agencies
Treasury DepartmentComptroller of the Currency
Abstract
The Office of the Comptroller of the Currency (OCC) proposes to revise the supervisory framework for the issuance of matters requiring attention (MRAs) in response to violations of laws or regulations and for addressing violations for which the OCC does not take an enforcement action or issue an MRA.
Full Text
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[Federal Register Volume 91, Number 168 (Tuesday, September 1, 2026)]
[Proposed Rules]
[Pages 56074-56080]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17822]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 91, No. 168 / Tuesday, September 1, 2026 /
Proposed Rules
[[Page 56074]]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 4
[Docket ID OCC-2026-0529]
RIN 1557-AF56
Violations of Laws or Regulations
AGENCY: Office of the Comptroller of the Currency (OCC), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Office of the Comptroller of the Currency (OCC) proposes
to revise the supervisory framework for the issuance of matters
requiring attention (MRAs) in response to violations of laws or
regulations and for addressing violations for which the OCC does not
take an enforcement action or issue an MRA.
DATES: Comments must be received on or before October 1, 2026.
ADDRESSES: Commenters are encouraged to submit comments through the
Federal eRulemaking Portal. Please use the title ``Violations of Laws
or Regulations'' to facilitate the organization and distribution of the
comments. You may submit comments by any of the following methods:
<bullet> Federal eRulemaking Portal--<a href="http://Regulations.gov">Regulations.gov</a>: Go to <a href="https://regulations.gov/">https://regulations.gov/</a>. Enter Docket ID ``OCC-2026-0529'' in the Search Box
and click ``Search.'' Public comments can be submitted via the
``Comment'' box below the displayed document information or by clicking
on the document title and then clicking the ``Comment'' box on the top-
left side of the screen. For help with submitting effective comments,
please click on ``Commenter's Checklist.'' For assistance with the
<a href="http://Regulations.gov">Regulations.gov</a> site, please call 1-866-498-2945 (toll free) Monday-
Friday, 9 a.m.-5 p.m. ET, or email <a href="/cdn-cgi/l/email-protection#3c4e595b49505d485553524f5459504c58594f577c5b4f5d125b534a"><span class="__cf_email__" data-cfemail="85f7e0e2f0e9e4f1eceaebf6ede0e9f5e1e0f6eec5e2f6e4abe2eaf3">[email protected]</span></a>.
<bullet> Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, Suite 1E-216, Washington, DC 20219.
<bullet> Hand Delivery/Courier: 400 7th Street SW, Suite 1E-216,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
Docket ID ``OCC-2026-0529'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the <a href="http://Regulations.gov">Regulations.gov</a> website without change, including any business or
personal information provided such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this action by the following method:
<bullet> Viewing Comments Electronically--<a href="http://Regulations.gov">Regulations.gov</a>: Go to
<a href="https://regulations.gov/">https://regulations.gov/</a>. Enter Docket ID ``OCC-2026-0529'' in the
Search Box and click ``Search.'' Click on the ``Dockets'' tab and then
the document's title. After clicking the document's title, click the
``Browse All Comments'' tab. Comments can be viewed and filtered by
clicking on the ``Sort By'' drop-down on the right side of the screen
or the ``Refine Comments Results'' options on the left side of the
screen. Supporting materials can be viewed by clicking on the ``Browse
Documents'' tab. Click on the ``Sort By'' drop-down on the right side
of the screen or the ``Refine Results'' options on the left side of the
screen checking the ``Supporting & Related Material'' checkbox. For
assistance with the <a href="http://Regulations.gov">Regulations.gov</a> site, please call 1-866-498-2945
(toll free) Monday-Friday, 9 a.m.-5 p.m. ET, or email
<a href="/cdn-cgi/l/email-protection#a0d2c5c7d5ccc1d4c9cfced3c8c5ccd0c4c5d3cbe0c7d3c18ec7cfd6"><span class="__cf_email__" data-cfemail="63110604160f02170a0c0d100b060f1307061008230410024d040c15">[email protected]</span></a>.
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.
FOR FURTHER INFORMATION CONTACT: Eden Gray, Assistant Director,
Marjorie Dieter, Special Counsel, Anna Mills, Counsel, Harry
Naftalowitz, Attorney, Chief Counsel's Office, 202-649-5490, Office of
the Comptroller of the Currency, 400 7th Street SW, Washington, DC
20219. If you are deaf, hard of hearing, or have a speech disability,
please dial 7-1-1 to access telecommunications relay services.
SUPPLEMENTARY INFORMATION:
I. Background
The OCC is responsible for assuring that institutions \1\ under its
jurisdiction comply with applicable laws and regulations.\2\ A
violation of law or regulation is an act or failure to act that
deviates from, or fails to comply with, a statutory or regulatory
requirement. If the OCC determines that an institution violated a law
or regulation, the OCC communicates the violation to the institution
and may require corrective action.\3\ On October 30, 2025, the OCC and
FDIC (collectively, the agencies) proposed to issue a rule to, among
other things, revise the supervisory framework for the issuance of MRAs
(MRA proposal).\4\ The final rule related to the MRA proposal (MRA
final rule) is published elsewhere in this issue of the Federal
Register.\5\ The MRA proposal would have permitted the OCC to issue an
MRA in response to a practice, act, or failure to act, alone or
together with one or more other practices, acts, or failures to act,
that is an actual violation of a banking or banking-related law or
regulation.\6\ The
[[Page 56075]]
OCC solicited comment on various aspects of the MRA proposal, including
the scope of the ``banking and banking-related'' standard and whether
violations of laws or regulations must also present a reasonably
foreseeable risk of or actual material harm to the financial condition
of the institution.
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\1\ For purposes of this SUPPLEMENTARY INFORMATION, the term
``institution'' refers to national banks, Federal savings
associations, and Federal branches and agencies of foreign banks.
See 12 CFR 4.92(a).
\2\ See, e.g., 12 U.S.C. 1(a), 1818(b)(1).
\3\ Through various statutory examination and reporting
authorities, Congress has conferred upon the OCC the authority to
exercise visitorial powers and examination authorities with respect
to supervised institutions. Id. 481, 1463, 1464, 5412(b)(2)(B). The
Supreme Court has indicated support for a broad reading of certain
visitorial powers. The examination and visitorial powers authorize
the OCC to issue MRAs. See, e.g., Cuomo v. Clearing House Ass'n, 557
U.S. 519 (2009); United States v. Gaubert, 499 U.S. 315 (1991);
United States v. Phila. Nat'l Bank, 374 U.S. 321 (1963).
\4\ Unsafe or Unsound Practices, Matters Requiring Attention, 90
FR 48835 (Oct. 30, 2025).
\5\ See the interagency final rule titled Unsafe or Unsound
Practices, Matters Requiring Attention published elsewhere in this
issue of the Federal Register.
\6\ Unsafe or Unsound Practices, Matters Requiring Attention, 90
FR at 48849. The MRA proposal addressed and the MRA final rule
addresses the issuance of MRAs in response to a practice, act, or
failure to act, that is contrary to generally accepted standards of
prudent operation and presents certain risks of material harm to the
financial condition of the institution (including if the financial
condition of the institution has already been materially harmed) or
loss to the Deposit Insurance Fund. These aspects of the MRA
standard are not proposed to be amended by this notice of proposed
rulemaking.
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The OCC is issuing this proposed rulemaking that would, if
finalized, further refine the standard for the issuance of MRAs for
legal violations. As described below, the proposed rule would establish
and define two categories of violations of laws or regulations:
``substantive violations'' and ``technical violations.'' \7\ The OCC
would be permitted to issue an MRA in response to a substantive
violation. For technical violations, the proposed rule would provide a
mechanism other than MRAs to address these violations. The proposed
distinction between substantive violations and technical violations
would prioritize examiners' and institutions' attention on substantive
violations, i.e., those violations that have a greater likelihood to
impact the institution or its customers.\8\ The proposal would provide
an effective mechanism to ensure that institutions comply with
applicable laws and regulations, including substantive and technical
violations.
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\7\ The MRA final rule incorporates aspects of the substantive
violation standard as a matter of policy. This proposal would
establish a legally binding limit on the OCC's ability to issue an
MRA in response to a violation of a law or regulation.
\8\ This prioritization of substantive violations is consistent
with the OCC's current practices.
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II. Description of the Proposed Rule
To properly focus institution and examiner attention on the
violations of law or regulation that are most critical to the prudent
operation of a financial institution, the proposed rule would limit the
issuance of MRAs addressing banking or banking-related violations of
laws or regulations to substantive violations.\9\ The OCC expects that,
generally, substantive violations would be limited to violations of
banking or banking-related laws, as opposed to laws that are unrelated
to banking, like employment laws or zoning laws. The term ``substantive
violation'' would replace the term ``actual violation'' in the OCC's
MRA standard. This substitution of terms would not permit the OCC to
issue an MRA based on mere speculation that an institution violated a
law or regulation or to prevent the potential violation of a law or
regulation. Rather, the ``substantive violation'' qualification in the
proposed rule would reserve the issuance of MRAs to violations that
meet certain criteria. The OCC would still be required to explain the
factual basis underlying the cited violation.
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\9\ The OCC requests comment on whether it should remove the
term ``banking or banking-related'' from the MRA standard set forth
in 12 CFR 4.92(c).
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A new paragraph would be added to provide a general definition of a
substantive violation. The paragraph would deem a violation of law or
regulation to be substantive ``if its nature, duration, frequency, or
severity could meaningfully impact the institution or its customers.''
The general definition of the term ``substantive violation'' would be
followed by five categories to provide more concrete parameters as to
what qualifies as a substantive violation.\10\ If a violation of law or
regulation meets the criteria of any one of these five categories, the
violation would support the issuance of an MRA. The violation must meet
the criteria of at least one of the five categories to qualify as a
substantive violation. The OCC believes that judicious use of MRAs will
best position institutions to prevent harm to institutions and their
customers, and the proposal would accordingly limit the scope of
violations that would support the issuance of an MRA. The proposal
would also preserve examiners' discretion to use less formal
supervisory mechanisms to address the violation of a law or regulation,
if examiners believe such a mechanism would be effective in ensuring
the violation ceases and is appropriately corrected.
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\10\ The MRA final rule grouped substantive violations into four
categories. The criteria for a substantive violation would be
unchanged by this proposal's regrouping of substantive violations
into five categories.
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Systemic or Patterns of Violations
First, violations that are systemic or constitute a pattern of
violations would meet the definition of a substantive violation.
Systemic violations of laws or regulations are violations that are
widespread or prevalent within an institution or business line. Bank
Secrecy Act (BSA) compliance program violations or pillar violations,
such as a failure to designate an individual responsible for
coordinating and monitoring day-to-day BSA compliance, would generally
meet this criterion.\11\ A pattern of violations refers to repeated or
ongoing violations, considering the number of violations and the length
of time in which the violations occurred. For example, repeated
failures to obtain an appraisal on properties securing higher-risk
mortgages could support a finding of a pattern of violations, depending
on the particular facts and circumstances, like the annual number of
higher-risk mortgages the institution originates.\12\ Likewise, ongoing
violations of the reporting requirements set forth in the Office of
Foreign Assets Control's regulations could support a finding of a
pattern of violations, depending on the particular facts and
circumstances, like the volume of transactions at the institution that
trigger the reporting requirements.\13\ Isolated violations generally
do not create a reasonable expectation of future violations and would
accordingly be excluded from this category of substantive
violations.\14\
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\11\ See 12 CFR 21.21.
\12\ See 15 U.S.C. 1639h.
\13\ See 31 CFR part 501 et seq.
\14\ Nonetheless, an isolated violation of a law or regulation
could meet the criteria of other categories of substantive
violations.
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Violations Impacting an Institution's Financial Condition
Second, a violation would be considered substantive if it has or
could reasonably be expected to have a direct, clear, predictable, and
more than minimal impact on the institution's financial condition.
Whether the requisite impact could reasonably be expected, for this and
other categories of substantive violations, requires more than a remote
possibility that the impact will manifest. For example, the OCC expects
that an institution's purchase of low-quality assets from an affiliate,
resulting in a violation of Regulation W, would generally meet this
part of the definition.\15\ Hindsight may be informative, but it is not
determinative of whether an impact to the financial condition of the
institution could reasonably have been expected to materialize.
Accordingly, where an institution has already experienced the requisite
impact to its financial condition, the violation would be considered
under this second category only if the impact was predictable. For
example, if an institution suffered more than minimal deposit outflow
after depositors discovered that the institution originated a small
quantity of loans in violation of the Flood Disaster Protection Act,
such an impact to the financial condition of the institution generally
would not be considered predictable, and the violation would not be
considered substantive under this second category.
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\15\ See 12 CFR part 223.
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The second category of substantive violations would also require
that the violation has a direct and clear impact
[[Page 56076]]
to the financial condition of the institution.\16\ Mere correlations or
attenuated connections between a violation of law and impact to the
financial condition of an institution would not support the issuance of
an MRA. As with all aspects of the OCC's MRA standard, the OCC would
use objective facts and sound reasoning to determine whether a
violation of law had a direct and clear impact on an institution's
financial condition.\17\
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\16\ Included in the requirement that a violation have a
``direct'' impact on the financial condition of the institution
would be that the violation itself, as opposed to the regulatory
response to the violation, must create the impact on the
institution's financial condition. Accordingly, a civil money
penalty assessed in response to a violation of law would not provide
the requisite impact to the financial condition of the institution
to meet the criteria of this second category of substantive
violations.
\17\ See 12 CFR 4.92(f). The proposal would redesignate the
current paragraph (f) as paragraph (g).
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Lastly, the requisite expected or actual impact under this second
category of substantive violations would be a more than minimal impact
on the institution's financial condition. The OCC intends for the
phrase ``more than minimal impact'' to include impact that would not be
considered ``material'' under the material harm to the financial
condition of the institution prong of the MRA standard.\18\ However, de
minimis impacts to the financial condition of an institution would not
give rise to a substantive violation under this second category. The
OCC would consider financial losses or other negative impacts to an
institution's capital, asset quality, earnings, liquidity, or
sensitivity to market risk as the relevant indicators of impact to an
institution's financial condition.\19\
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\18\ See id. Sec. 4.92(c)(1)(ii). Material harm to the
financial condition of an institution is an otherwise sufficient
basis for the issuance of an MRA. Considering the importance of
compliance with applicable laws and regulations, the proposal would
decrease the requisite harm to the financial condition of an
institution needed for a violation to be deemed substantive and, in
turn, support the issuance of an MRA.
\19\ See id. Sec. 4.92(d). The proposal would redesignate
paragraph (d) as paragraph (e), to clarify that the OCC's definition
of financial condition also applies to the second category of
substantive violations.
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Violations Impacting Institution Books and Records
The third category of substantive violations would be violations
that have had or could reasonably be expected to have a more than
minimal impact on the accuracy of the institution's books and records.
As in the second category, a more than minimal impact is less than
material but more than de minimis. For example, an inaccurate
Consolidated Report of Condition and Income (Call Report) need not
result in a change to an institution's Prompt Corrective Action
category for such a violation to be considered a substantive violation
under this category.\20\ At the same time, Call Report inaccuracies are
not per se substantive violations; whether the violation is substantive
would be assessed by considering the relative and absolute impact of
the inaccuracy, as well as other qualitative and quantitative factors
the OCC deems appropriate. If an inaccuracy in a Call Report would be
considered a ``material misstatement or omission'' under the Federal
Financial Institutions Examination Council (FFIEC) guidance on whether
an institution must amend one or more Call Reports, such an inaccuracy
would generally be considered a substantive violation.\21\
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\20\ See 12 U.S.C. 161.
\21\ See generally, Federal Financial Institutions Examination
Council, Instructions for Preparation of Consolidated Reports of
Condition and Income: FFIEC 031 and FFIEC 041 at A-1 to A-3 (Dec.
2025). However, the OCC expects that a Call Report inaccuracy would
not meet the criteria of the third category of substantive
violations unless the inaccuracy would be considered a ``material
misstatement or omission'' under the FFIEC's guidance.
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Violations Requiring Restitution or Impacting Customers
The fourth category of substantive violations would be violations
that require more than minimal restitution or could reasonably be
expected to have a more than minimal adverse impact to customers.
Whether an adverse impact or restitution is ``more than minimal'' would
be determined in terms of the reasonably expected size of the
restitution payments, degree of the adverse impact, and number of
persons affected by the violation. Accordingly, under the proposal,
restitution would be considered ``more than minimal'' both where a few
customers are entitled to a large amount of restitution and where many
customers are each entitled to a small amount of restitution.
In the more than minimal restitution subcategory, the term
``required'' does not refer to the OCC's authority to require
restitution or a statutory mandate that restitution be paid. Rather,
that term is intended to indicate that restitution is necessary to make
the recipients whole. Whereas the more than minimal restitution
subcategory focuses on financial harm to persons, the subcategory that
covers violations reasonably expected to have a more than minimal
adverse impact on customers includes both financial and nonfinancial
impacts.\22\ For example, if an institution fails to establish or
administer an adequate identity theft program in violation of the Fair
Credit Reporting Act and its implementing regulations, the violation
could have a more than minimal adverse impact on customers regardless
of whether any financial impacts actually materialize.\23\
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\22\ For purposes of the proposal, the term ``customer'' refers
to applicants, current customers, and former customers protected by
applicable laws or regulations.
\23\ See 12 CFR 41.90.
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Insider Violations
The fifth and final category of substantive violations are
violations that involve insider misconduct or self-dealing. The
prevention of such abuses is integral to safe and sound banking.
Studies have found that insider abuses often contribute to an
institution's failure.\24\ Moreover, insider abuses corrode the
public's trust in the banking system.\25\ Accordingly, such violations
would support the issuance of an MRA regardless of the size or
prevalence of such violations at an institution. Examples of violations
involving insider misconduct would include violations of any law or
regulation perpetrated by an insider knowingly or for the benefit of
the insider or the insider's associate. Violations of laws or
regulations that involve self-dealing include violations of Regulation
O \26\ and, in some instances, section 22(e) of the Federal Reserve
Act.\27\
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\24\ See GAO 94-88, Bank Insider Activities: Insider Problems
and Violations Indicate Broader Management Deficiencies (insider
abuses occurred in 175 institutions that failed in 1990 and 1991, 61
percent of all institutions that failed during that period); See
also OCC, Comptroller's Handbook: Insider Activities at 1 (Nov.
2013) (``Studies of bank failures have found that insider abuse--
such as poor-quality loans made and unjustified fees paid to
directors and officers--often contributes to the failures.'').
\25\ See OCC, Comptroller's Handbook: Problem Bank Supervision
at 8 (Sept. 2021).
\26\ 12 CFR 31.2 (OCC); 12 CFR part 215 (Federal Reserve Board).
\27\ 12 U.S.C. 376.
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Tailoring
As with all aspects of the OCC's MRA standard, the OCC would tailor
the issuance of MRAs for substantive violations of laws or regulations
based on the risks associated with an institution's capital structure,
complexity, activities, asset size, and any other financial risk-
related factor that the OCC deems appropriate.\28\ The tailoring
provision would not modify institutions' compliance requirements for
applicable laws or regulations, or
[[Page 56077]]
permit any institutions to violate the law. Rather, the tailoring
provision would enhance the OCC's ability to provide the appropriate
supervisory response to each violation, considering all relevant
factors. For example, regarding substantive violations that constitute
a pattern, the number of violations needed to establish a pattern would
be assessed relative to the frequency of an institution's activities
that implicate compliance with a particular set of laws or regulations.
A higher number of violations would generally be required to establish
a pattern at a large institution than at a small institution. At the
same time, the error rate threshold to establish a pattern of
violations would be lower at a large institution than at a small
institution. Additionally, regarding substantive violations that had a
more than minimal impact on the financial condition of an institution,
the tailoring provision would allow the OCC to undertake a more
granular assessment of the impact to the financial condition of a large
institution (e.g., the impact to a business line) and a less granular
assessment of the impact to the financial condition of a small
institution. The granularity of that assessment, among other tailoring
factors, could affect whether the OCC would determine that an MRA is
the appropriate supervisory mechanism to address that violation.
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\28\ 12 CFR 4.92(e). The proposal would redesignate the current
paragraph (e) as paragraph (f).
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Technical Violations
The proposal also includes a new paragraph that establishes the
OCC's approach to violations for which the OCC does not take an
enforcement action or issue a matter requiring attention.\29\ The OCC
would refer to these violations as ``technical violations.'' This new
paragraph would replace the OCC's ``other violations'' paragraph in 12
CFR 4.92.\30\
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\29\ Under this proposal, the OCC could respond to a violation
of a law or regulation with the issuance of a technical violation
instead of an MRA, even if the violation would meet the criteria of
a substantive violation.
\30\ 12 CFR 4.92(h)
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The proposed rule would consider a violation of a law or regulation
to be technical if the nature, duration, frequency, and severity of the
violation could not meaningfully impact the institution and its
customers. In other words, if a violation would not meet the criteria
for a substantive violation, the OCC would deem the violation a
technical violation. The proposed rule would permit the OCC to direct
an institution to correct a technical violation, provided that the OCC
would not specify the corrective action the institution must take or
include other corrective actions unrelated to the violation. The
proposed rule would also clarify that the OCC may direct an institution
to take such other actions as are required by law, if any.
To illustrate, if an institution, in violation of Regulation B,
fails to provide a notice of incompleteness or notice of taking adverse
action on an incomplete application to a credit applicant, the proposal
would allow the OCC to require the institution to correct the violation
without prescribing how to correct the violation.\31\ However, the OCC
would not require the institution to notify the OCC that it has
corrected the Regulation B violation or provide to the OCC an action
plan to track corrective actions taken by the institution.
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\31\ See 12 CFR 1002.9(c).
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Generally, the OCC would document its finding of a technical
violation but would not track whether an institution has corrected the
violation. The institution would not be required to inform the OCC when
the technical violation has been corrected. If one or more technical
violations would later meet the criteria of a substantive violation,
the OCC would then be permitted to issue an MRA.
Noncompliance With Guidelines
The proposal focuses on violations of laws and regulations. For
noncompliance with guidelines set forth in the OCC's Safety and
Soundness Standards,\32\ the OCC believes that existing supervisory
mechanisms provide the appropriate degree of examiner and institution
focus on addressing such noncompliance.\33\ Accordingly, the OCC
proposes to explicitly exclude noncompliance with the guidelines set
forth in the OCC's Safety and Soundness Standards from the definitions
of substantive and technical violations. If noncompliance with the
guidelines would later meet the criteria for the issuance of an MRA in
response to a practice, act, or failure to act, that is contrary to
generally accepted standards of prudent operation and presents certain
risks of material harm to the financial condition of the institution,
the OCC would then be permitted to issue an MRA. The OCC invites
comment on whether there are other illustrative examples of guidelines
the OCC should specify as being excluded from the definitions of
substantive and technical violations.
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\32\ 12 CFR part 30.
\33\ See, e.g., Sec. 30.3.
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III. Request for Comments
The agencies request feedback on all aspects of the proposed rule,
including:
Question 1: Are substantive violations of laws or regulations the
appropriate scope of violations to support the issuance of an MRA? If
so, should the OCC include any other categories of substantive
violations of laws or regulations?
Question 2: Should violations of applicable state laws or
regulations support the issuance of an MRA?
Question 3: Should the OCC revise the prefatory language to the
definition of ``substantive violation'' to reflect both future impacts
and impacts that have already materialized?
Question 4: For the first category of substantive violations, what
other factors should the OCC consider when determining whether
violations of laws or regulations are systemic or constitute a pattern?
Question 5: Is ``more than minimal impact on the institution's
financial condition'' the appropriate standard for substantive
violations that could meaningfully impact the finances of an
institution? If not, what standard would be appropriate, and why?
Should the OCC use the words ``harm to'' instead of the words ``impact
on''? Should a greater degree of harm to the financial condition of an
institution be required for a violation of law to be considered
substantive under the second category of substantive violations?
Question 6: For the third category of substantive violations, is
``more than minimal impact on the accuracy of the institution's books
and records'' the correct standard? If not, what standard would be
appropriate, and why? Should the standards promulgated by the Financial
Accounting Standards Board guide the OCC's determination on whether a
violation caused a more than minimal impact on the accuracy of an
institution's books and records, and if so, how?
Question 7: Is ``more than minimal restitution'' the appropriate
measure for the requisite restitution to find a substantive violation
under the fourth category of substantive violations? If not, what
standard would be appropriate, and why?
Question 8: Is ``more than minimal adverse impact to customers''
the appropriate standard to find a substantive violation under the
fourth category of substantive violations? If not, what standard would
be appropriate, and why? Should substantive violations include a
violation that had or could reasonably be expected to have a ``more
than minimal adverse impact to the public''? If so, are there any
limiting principles the OCC should incorporate into a ``more than
minimal adverse impact to
[[Page 56078]]
the public'' standard to ensure the OCC applies the standard
appropriately? For example, should the OCC require that a violation had
or be reasonably expected to have a ``direct, clear, and predictable''
more than minimal adverse impact to the public?
Question 9: Should the OCC revise its tailoring provision codified
at 12 CFR 4.92 to reflect or enhance this proposal? For example, should
the OCC clarify the tailoring standard to explicitly state that the
``more than minimal impact to the financial condition'' standard or its
alternative would be tailored to the risk factors of each institution?
Should the OCC tailor the issuance of MRAs in response to insider
violations?
Question 10: Are there guidelines other than the safety and
soundness standards set forth in the appendices to 12 CFR part 30 that
have an existing supervisory mechanism to provide the appropriate
degree of focus on addressing such noncompliance, and that the OCC
should accordingly exclude from the substantive violation and technical
violation standards? For example, should the OCC exclude the
Interagency Guidelines for Real Estate Lending from the substantive
violation and technical violation standards?
Question 11: How, if at all, should the substantive violation or
technical violation standards address credit write-ups and other
related issues? Should examiners be permitted to require an institution
to assign a different credit risk rating to loans? Should examiners be
permitted to require an institution to place a loan into nonaccrual
status?
Question 12: Is the proposed ``technical violations'' supervisory
mechanism more appropriate than the OCC's current ``other violations''
mechanism? Is the technical violations mechanism broader or narrower
than the other violations mechanism, and if so, how?
Question 13: Should the OCC remove the term ``banking or banking-
related'' from the OCC's MRA standard, codified at 12 CFR 4.92(c)? Does
the proposed substantive violation standard appropriately define the
scope of violations that would support the issuance of an MRA? Would
removal of the term ``banking or banking-related'' better align with
the proposed technical violations supervisory mechanism?
Question 14: Should the OCC further clarify the actions the OCC may
take in response to a technical violation to specify that the OCC may
take any action required by law? Is the proposed clarification that the
OCC may direct an institution that commits a technical violation to
take such other actions required by law necessary?
IV. Impact Analysis
A. Introduction & Background
The OCC is proposing a rule to revise the supervisory framework for
the issuance of MRAs in response to violations of laws or regulations
and for addressing violations for which the OCC does not take an
enforcement action or issue an MRA. As discussed above, consistent with
a policy adopted in the MRA final rule, the proposed rule would
establish and define two categories of violations of laws or
regulations: ``substantive violations'' and ``technical violations.''
The OCC would be permitted to issue an MRA in response to a substantive
violation, and the proposed rule would provide a mechanism other than
MRAs to address technical violations. The proposed rule would
prioritize examiners' and institutions' attention on substantive
violations, i.e., those violations that have a greater likelihood to
impact the institution or its customers.
B. Parties Affected by the Proposed Rule
The OCC currently supervises 986 institutions.\34\ Because all OCC-
supervised institutions were subject to the supervisory and enforcement
standards in effect immediately before the OCC proposed this rule, the
rule would affect all 986 institutions the OCC supervises.
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\34\ Based on data accessed using the Financial Institution Data
Retrieval System (FINDRS) on July 29, 2026.
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C. Costs and Benefits
i. Cost Savings From Decreased Regulatory Compliance Burden
The proposed rule would, consistent with the OCC's policy in the
MRA final rule, result in several direct benefits to institutions,
namely, cost and time savings. Additionally, the proposed rule does not
impose new mandates or costs related thereto on institutions.
Under the proposed rule, the OCC expects that it would cite fewer
violations of laws or regulations as substantive, as defined under the
proposed rule, resulting in the issuance of fewer MRAs. As a result,
institutions would have fewer MRAs to address and remediate. Generally,
the OCC expects that the costs and time required to remediate a
violation can range from de minimis to significant. Although
institutions must address and remediate all violations of laws or
regulations, including technical violations, substantive violations
cited in an MRA may have more significant remediation costs and burden.
For example, in response to an MRA, some institutions hire external
consultants, for which hourly rates can range from between $300 to
$1,200 an hour for top-tier firms or $150 to $300 an hour for lower-
tier firms, or financial advisory firms that charge institutions $250
to $550 per hour.\35\ To the extent that there may be less need for
consultants, institutions may directly benefit from consultant cost
savings.
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\35\ See Clancy Fossum, Embark, What are the Fees & Hourly Rates
of Accounting Consulting Firms? (Nov. 13, 2019), https://
blog.embarkwithus.com/what-are-the-fees-hourly-rates-of-accounting-
consulting-firms#:~:text=in%20each%20category.-
,Big%204%20Firms,global%20footprints%2C%20and%20charge%20accordingly.
&text=
Although%20Big%204%20fees%20in,be%20aware%20of%20before%20proceeding;
Consulting Mavericks, Average Consulting Rates by Industry, <a href="https://consultingmavericks.com/start/other/average-consulting-rates-by-industry/">https://consultingmavericks.com/start/other/average-consulting-rates-by-industry/</a> (last visited Sept. 26, 2025).
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Institutions may incur other direct costs to successfully address
MRAs, including increased hiring and retention of appropriately
qualified employees, training for existing employees, time expenditure
of employees (which may include time spent addressing MRAs, time by
management and the board to review and approve changes made, time spent
working with external consultants, time conducting internal audit
verification, and time spent in partnership with the OCC in ongoing
follow up communications and examinations specific to the issue),
updating processes and procedures, and addressing the root cause of the
substantive violation that is the basis of the MRA. Although
institutions would also incur direct costs associated with addressing
and remediating technical violations, the OCC expects these direct
costs to be less than those necessary to address substantive violations
because examiners would be limited to directing the institution to
correct the technical violation and could not specify the corrective
action the institution must take or include other corrective actions
unrelated to the violation.
While it would be difficult to precisely quantify the overall
aggregate annual direct cost savings to institutions, the OCC expects
that cost savings would be de minimis. In addition to the direct cost
savings described above, institutions could potentially experience
several indirect benefits, including clarity regarding, and consistent
application of, MRA standards.
ii. Costs and Benefits Relating to the Safety and Soundness of
Institutions
The proposed rule imposes no new mandates, and thus no direct
costs, on institutions, and has a low probability of
[[Page 56079]]
causing indirect costs to institutions. Regarding indirect costs, the
narrowed MRA standard for violations of laws or regulations in the
proposal could delay the identification of the root cause of technical
violations of law or regulations.
This delayed identification could result in higher costs to resolve
certain issues or the occurrence of similar violations, although, in
the OCC's supervisory experience, most technical violations are not
costly to remediate.
Further, the OCC determined it is unlikely that the proposed rule
will result in the delayed identification of violations that are likely
to significantly impact the institution or its customers, which would
be substantive violations. The OCC expects that the proposed rule would
benefit safety and soundness as it would prioritize examiners' and
institutions' attention on substantive violations, i.e., those
violations that have a greater likelihood to impact the institution or
its customers.
Therefore, the OCC expects that the proposed rule would benefit
safety and soundness and does not expect that the indirect costs of the
narrowed MRA standard for violations of laws or regulations in the
proposal to be more than de minimis.
V. Regulatory Analyses
A. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 \36\ (PRA) states that no
agency may conduct or sponsor, nor is the respondent required to
respond to, an information collection unless it displays a currently
valid Office of Management and Budget (OMB) control number. The OCC has
reviewed this proposed rule and determined that it does not create any
information collection or revise any existing collection of
information. Accordingly, no PRA submissions to OMB will be made with
respect to this proposed rule.
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\36\ 44 U.S.C. 3501-3521.
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B. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act \37\ (RFA) requires an agency to
consider the impact of its proposed rules on small entities. In
connection with a proposed rule, the RFA generally requires an agency
to prepare an Initial Regulatory Flexibility Analysis (IRFA) describing
the impact of the rule on small entities, unless the head of the agency
certifies that the proposed rule will not have a significant economic
impact on a substantial number of small entities and publishes such
certification along with a statement providing the factual basis for
such certification in the Federal Register. An IRFA must contain: (1) a
description of the reasons why action by the agency is being
considered; (2) a succinct statement of the objectives of, and legal
basis for, the proposed rule; (3) a description of and, where feasible,
an estimate of the number of small entities to which the proposed rule
will apply; (4) a description of the projected reporting,
recordkeeping, and other compliance requirements of the proposed rule,
including an estimate of the classes of small entities that will be
subject to the requirements and the type of professional skills
necessary for preparation of the report or record; (5) an
identification, to the extent practicable, of all relevant Federal
rules that may duplicate, overlap with, or conflict with the proposed
rule; and (6) a description of any significant alternatives to the
proposed rule that accomplish its stated objectives.
---------------------------------------------------------------------------
\37\ 5 U.S.C. 601-612.
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The OCC currently supervises 986 institutions (commercial banks,
trust companies, Federal savings associations, and branches or OCC of
foreign banks),\38\ of which approximately 602 are small entities under
the RFA.\39\
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\38\ Based on data accessed using the OCC's Financial
Institutions Data Retrieval System on July 29, 2026.
\39\ The OCC bases its estimate of the number of small entities
on the Small Business Administration's size thresholds for
commercial banks and savings institutions, and trust companies,
which are $850 million and $47 million, respectively. Consistent
with the General Principles of Affiliation, 13 CFR 121.103(a), the
OCC counted the assets of affiliated financial institutions when
determining if it should classify an OCC-supervised institution as a
small entity. The OCC used average quarterly assets in December 31,
2025, to determine size because a ``financial institution's assets
are determined by averaging the assets reported on its four
quarterly financial statements for the preceding year.'' See
footnote 8 of the U.S. Small Business Administration's Table of Size
Standards.
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In general, the OCC classifies the economic impact on an individual
small entity as significant if the total estimated impact in one year
is greater than 5 percent of the small entity's total annual salaries
and benefits or greater than 2.5 percent of the small entity's total
non-interest expense. Furthermore, the OCC considers 5 percent or more
of OCC-supervised small entities to be a substantial number, and at
present, 30 OCC-supervised small entities would constitute a
substantial number. Therefore, since the proposed rule would affect all
OCC-supervised institutions, a substantial number of OCC-supervised
small entities would be impacted.
This proposed rulemaking imposes no new mandates, and thus no
direct costs, on affected OCC-supervised institutions. Therefore, the
Comptroller of the Currency certifies that the proposed rule would not
have a significant economic impact on a substantial number of small
entities.
C. Unfunded Mandates Reform Act of 1995
The OCC has analyzed the proposed rule under the factors in the
Unfunded Mandates Reform Act of 1995 (UMRA).\40\ Under this analysis,
the OCC considered whether the proposed rule includes a Federal mandate
that may result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year ($193 million as adjusted annually for
inflation). Pursuant to section 202 of the UMRA,\41\ if a proposed rule
meets this UMRA threshold, the OCC would need to prepare a written
statement that includes, among other things, a cost-benefit analysis of
the proposal. The UMRA does not apply to regulations that incorporate
requirements specifically set forth in law.
---------------------------------------------------------------------------
\40\ 2 U.S.C. 1531 et seq.
\41\ Id. 1532.
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This proposed rulemaking imposes no new mandates--and thus no
direct costs--on affected OCC-supervised institutions. The OCC,
therefore, concludes that the proposed rule would not result in an
expenditure of $193 million or more annually by State, local, and
tribal governments, or by the private sector. Accordingly, the OCC has
not prepared the written statement described in section 202 of the
UMRA.
D. Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994, 12 U.S.C. 4802(a), in determining
the effective date and administrative compliance requirements for new
regulations that impose additional reporting, disclosure, or other
requirements on insured depository institutions, the OCC will consider,
consistent with principles of safety and soundness and the public
interest: (1) any administrative burdens that the proposed rule would
place on depository institutions, including small depository
institutions and customers of depository institutions; and (2) the
benefits of the proposed rule. The OCC requests comment on any
administrative burdens that the proposed rule would place on depository
institutions, including small depository institutions, and their
customers, and the benefits of
[[Page 56080]]
the proposed rule that the OCC should consider in determining the
effective date and administrative compliance requirements for a final
rule.
E. Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023, 5
U.S.C. 553(b)(4), requires that a notice of proposed rulemaking include
the internet address of a summary of not more than 100 words in length
of a proposed rule, in plain language, that shall be posted on the
internet website <a href="http://www.regulations.gov">www.regulations.gov</a>.
The Office of the Comptroller of the Currency proposes to revise
the supervisory framework for the issuance of matters requiring
attention (MRAs) in response to violations of laws or regulations and
for addressing violations for which the OCC does not take an
enforcement action or issue an MRA.
The proposal and the required summary can be found at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by searching for Docket ID OCC-2026-0529 and
<a href="https://occ.gov/topics/laws-and-regulations/occ-regulations/proposed-issuances/index-proposed-issuances.html">https://occ.gov/topics/laws-and-regulations/occ-regulations/proposed-issuances/index-proposed-issuances.html</a>.
F. Executive Orders 12866 and 14192
Executive Order 12866, titled ``Regulatory Planning and Review,''
as amended, requires the Office of Information and Regulatory Affairs
(OIRA), Office of Management and Budget to determine whether a proposed
rule is a ``significant regulatory action'' prior to the disclosure of
the proposed rule to the public. If OIRA finds the proposed rule to be
a ``significant regulatory action,'' Executive Order 12866 requires the
OCC to conduct a cost-benefit analysis of the proposed rule and for
OIRA to conduct a review of the proposed rule prior to publication in
the Federal Register. Executive Order 12866 defines ``significant
regulatory action'' to mean a regulatory action that is likely to (1)
have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities; (2) create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) materially alter
the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in Executive Order
12866. OIRA has determined that this rulemaking is a ``significant
regulatory action'' for purposes of Executive Order 12866.
Section 3(a) of Executive Order 14192 requires an agency, unless
prohibited by law, to identify at least ten existing regulations to be
repealed when the agency publicly proposes for notice and comment or
otherwise promulgates a new regulation. In furtherance of this
standard, section 3(c) of Executive Order 14192 requires that the new
incremental costs associated with new regulations shall, to the extent
permitted by law, be offset by the elimination of existing costs
associated with at least ten prior regulations. This proposed rule, if
finalized as proposed, is expected to be an E.O. 14192 deregulatory
action.
List of Subjects in 12 CFR Part 4
Administrative practice and procedure, Freedom of information,
Individuals with disabilities, Minority businesses, Organization and
functions (Government agencies), Reporting and recordkeeping
requirements, Women.
Authority and Issuance
For the reasons set forth in the preamble, and under the authority
of 12 U.S.C. 93a, chapter I of title 12 of the Code of Federal
Regulations is proposed to be amended as follows:
PART 4--ORGANIZATION AND FUNCTIONS, AVAILABILITY AND RELEASE OF
INFORMATION, CONTRACTING OUTREACH PROGRAM, POST-EMPLOYMENT
RESTRICTIONS FOR SENIOR EXAMINERS
0
1. The authority citation for part 4 continues to read as follows:
Authority: 5 U.S.C. 301, 552; 12 U.S.C. 1, 93a, 161, 481, 482,
484(a), 1442, 1462a, 1463, 1464, 1467a, 1817(a), 1818, 1820, 1821,
1831m, 1831p-1, 1831o, 1833e, 1867, 1951 et seq., 2601 et seq., 2801
et seq., 2901 et seq., 3101 et seq., 3102(b), 3401 et seq.,
3501(c)(1)(C), 5321, 5412, 5414; 15 U.S.C. 77uu(b), 78q(c)(3); 18
U.S.C. 641, 1905, 1906; 29 U.S.C. 1204; 31 U.S.C. 5318(g)(2), 9701;
42 U.S.C. 3601; 44 U.S.C. 3506, 3510; E.O. 12600, 52 FR 23781, 3
CFR, 1987 Comp., p. 235.
0
2. Amend Sec. 4.92 by:
0
a. In paragraph (c)(2), removing the words ``an actual'' and adding the
words ``a substantive'' in their place;
0
b. Removing paragraph (h);
0
c. Redesignating paragraphs (d) through (g) as paragraphs (e) through
(h);
0
d. Adding a new paragraph (d);
0
e. In newly redesignated paragraph (f)(2) and paragraph (f)(3)
introductory text, removing ``(e)(1)'' and adding in its place
``(f)(1)'';
0
f. In newly redesignated paragraph (g), removing ``(e)'' and adding in
its place ``(f)''; and
0
g. Adding paragraphs (i) and (j).
The additions read as follows:
Sec. 4.92 Enforcement and supervisory standards.
* * * * *
(d) Substantive violation of a law or regulation. A violation of a
law or regulation is substantive if its nature, duration, frequency, or
severity could meaningfully impact the institution or its customers.
Substantive violations of a law or regulation must:
(1) Be systemic, or constitute a pattern;
(2) Have had or reasonably be expected to have a direct, clear,
predictable, and more than minimal impact on the institution's
financial condition;
(3) Have had or reasonably be expected to have a more than minimal
impact on the accuracy of the institution's books and records;
(4) Require more than minimal restitution or reasonably be expected
to have a more than minimal adverse impact to customers; or
(5) Involve insider misconduct or self-dealing.
* * * * *
(i) Clarification regarding technical violations. (1) Paragraphs
(b) through (h) of this section do not apply to technical violations.
(2) A technical violation is a violation of a law or regulation for
which the OCC does not take an enforcement action or issue a matter
requiring attention.
(3) The OCC may not direct an institution that commits a technical
violation to take any action other than to correct the technical
violation or such other actions as are required by law.
(j) Clarification regarding noncompliance with guidelines.
Noncompliance with the guidelines set forth in the appendices to 12 CFR
part 30 is not a substantive violation under paragraph (d) of this
section or a technical violation under paragraph (i) of this section.
Jonathan V. Gould,
Comptroller of the Currency.
[FR Doc. 2026-17822 Filed 8-31-26; 8:45 am]
BILLING CODE 4810-33-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.