Federal bank regulatory agencies remove 'reputation risk' references from interagency documents
Bank compliance and risk teams must remove reputation risk as a standalone supervisory category from internal frameworks — the Fed, FDIC, and OCC have formally eliminated it from 15 interagency supervisory documents effective 2 June 2026.
Change
On 2 June 2026, the Federal Reserve, FDIC, and OCC jointly reissued 15 interagency guidance documents removing all reputation risk references, confirming that supervisory decisions must be based on material financial risks only.
Why it matters
The removal formalises the end of reputation risk as an operative supervisory category across federal bank examination. Banks that structured compliance programs, BSA/AML frameworks, or customer restriction policies around reputation risk exposure must review and update those frameworks. Continued reliance on reputation risk as a basis for restricting customer access for lawful businesses is no longer consistent with the federal supervisory framework. The agencies signalled further document updates are coming.
Implications
- — Bank compliance and risk management teams must review internal risk frameworks, BSA/AML policies, and customer onboarding and exit procedures that reference reputation risk as a standalone category — maintaining reputation risk as a basis for restricting lawful business customers is no longer consistent with the updated interagency framework.
- — Bank examiners and compliance officers should expect that any supervisory finding citing reputation risk alone — without an underlying material financial risk — will not be supported by the agencies' updated interagency guidance.
- — Legal and compliance teams at banks with de-banking policies covering cannabis, crypto, firearms, payday lending, or politically or religiously affiliated organisations must assess whether existing restriction policies can withstand scrutiny based solely on material financial risk.
Who is affected
- — Bank compliance and risk management teams at federally supervised institutions
- — BSA/AML officers managing customer onboarding, exit, and restriction policies
- — Legal teams at banks with de-banking policies referencing reputation risk for lawful-business customers
What to watch
- — Fed, FDIC, OCC ongoing review: agencies indicated further interagency document updates are forthcoming — watch for additional reputation risk removals from examination guidance and manuals.