OCC Takes Action to Address Unsafe Practices in the Banking Sector

Key Takeaways

• 42 North Private Bank: Received a Cease and Desist order from the OCC, requiring it to address deficiencies in interest rate risk, strategic planning, and capital management.
• Karla Vanderneut: Former Assistant Branch Manager at NBT Bank in New York, permanently banned from banking after making unauthorized withdrawals of at least $16,000 from a customer’s account.
• Josiah Kennedy: Former Vice President at Citizens Bank in Texas, permanently barred from banking after misappropriating over $59,000 in customer funds through unauthorized withdrawals.
• ICICI Bank Limited: In New York, the OCC terminated its Cease and Desist order after the bank demonstrated full compliance with previous Bank Secrecy Act and Anti-Money Laundering concerns.
• Wells Fargo Bank: The OCC terminated its Cease and Desist order after the bank met regulatory requirements regarding loss mitigation activities.

Deep Dive

The Office of the Comptroller of the Currency (OCC) is back in action this month, rolling out a series of enforcement decisions that highlight the agency’s ongoing commitment to ensuring the health and safety of financial institutions. The agency’s latest actions range from enforcing accountability at individual banks to taking decisive steps against those who breach trust.

One of the biggest moves this month was the OCC’s Cease and Desist order against 42 North Private Bank. The bank, which had already faced regulatory attention in 2017, is now under pressure to address significant shortcomings in areas like interest rate risk, strategic planning, and capital management. The OCC has given the bank a chance to fix these issues but warned that failure to comply could lead to more severe consequences. It's a pivotal moment for the bank as it works to regain its footing and meet regulatory expectations.

Holding Individuals Accountable

But the OCC isn’t stopping at banks. The agency is also taking strong action against individuals whose actions undermine the trust that customers place in the banking system. Karla Vanderneut, a former Assistant Branch Manager at NBT Bank, has been permanently banned from the industry after using a customer’s account to withdraw at least $16,000 without authorization. Vanderneut’s actions were not just a violation of policy, but a betrayal of the fiduciary trust that is expected of those in positions of responsibility.

In another case, Josiah Kennedy, a former Vice President and Mortgage Loan Officer at Citizens Bank, misappropriated over $59,000 in customer funds by making unauthorized withdrawals from a construction loan. The OCC has issued an Order of Prohibition, permanently barring Kennedy from participating in banking activities. It’s a stark reminder that unethical behavior can have lasting consequences.

Progress and Improvement at Two Banks

On a more positive note, the OCC has also acknowledged progress at two banks that have made significant strides in resolving previous issues. ICICI Bank Limited has successfully addressed concerns related to its Bank Secrecy Act and Anti-Money Laundering compliance. As a result, the OCC has lifted the Cease and Desist order issued in 2022, signaling that the bank is now in full compliance.

Similarly, Wells Fargo has demonstrated substantial progress in fixing the deficiencies related to its loss mitigation activities. After being under a Cease and Desist order since 2021, Wells Fargo has made the necessary changes to meet the OCC’s standards, and the order has now been terminated.

Accountability is crucial for organizations, whether you're running a bank or managing a customer’s account. The OCC continues to hold the banking sector to high standards, reminding both institutions and individuals that responsibility is non-negotiable. Fail to meet the mark, and there will be consequences. But make the effort to improve, and there’s always room for growth and redemption.

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