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Nutter Bank Report: November 2025
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- OCC Announces BSA/AML Changes to Reduce Regulatory Burden for Community Banks
- Banking Agencies Consider Lowering the CBLR, Extending Compliance Grace Period
- OCC Confirms National Banks’ Authority to Hold Crypto-Assets to Pay Gas Fees
- CFPB Announces Reconsideration of Small Business Lending Data Collection Rule
- Other Developments: Core Processors and CFPB Funding
1. OCC Announces BSA/AML Changes to Reduce Regulatory Burden for Community Banks
The OCC has announced changes to Bank Secrecy Act/Anti-Money Laundering (BSA/AML) examination procedures and data collection requirements applicable to community banks to reduce regulatory burdens. The policy changes are described in two separate bulletins to national banks and federal savings associations, issued on November 24, relating to BSA/AML compliance exams and money laundering risk system data collection. For BSA/AML compliance examinations, the OCC established new Community Bank Minimum BSA/AML Examination Procedures that will be effective for examinations beginning on February 1, 2026. According to the OCC, the new procedures emphasize examiner discretion. For example, the procedures will allow examiners to carry forward prior cycle training and compliance officer examination conclusions for one examination cycle when there have been no significant changes to a bank’s risk profile. The new procedures also allow examiners to determine whether and to what extent to perform transaction testing in BSA/AML compliance exams. Click for a copy of OCC Bulletin 2025-37 for access to the new BSA/AML compliance exam procedures and click for a copy of OCC Bulletin 2025-39 for information about changes to the OCC’s money laundering risk system data collection.
Nutter Notes: The OCC announced on November 24, that it is immediately discontinuing the annual mandatory data collection from community banks of money laundering (ML) and terrorist financing (TF) risk data through the Money Laundering Risk (MLR) System. The change results from a determination by the OCC that “there are alternative, less burdensome means of assessing community banks’ ML/TF risks and, therefore, believes the MLR System is no longer necessary.” The OCC emphasized that examiners will still expect community banks to adequately understand the ML/TF risks of their operations and comply with applicable BSA/AML laws and regulations. Generally, national banks and federal savings associations with total assets of $10 billion or less are characterized as community banks by the OCC and are therefore subject to the policy changes on BSA/AML compliance exams and money laundering risk system data collection. The Federal Reserve and FDIC have not yet announced any similar changes to their supervision of state-chartered banks.
2. Banking Agencies Consider Lowering the CBLR, Extending Compliance Grace Period
The federal banking agencies are considering a proposed rule that, if adopted, would revise the community bank leverage ratio (CBLR) framework by (1) lowering the CBLR requirement for qualifying community banking organizations from 9% to 8%; and (2) extending the current 2-quarter compliance grace period to 4 quarters. The FDIC voted on November 25 to approve the publication of the proposed rule. The extension of the CBLR grace period allows more time for banking organizations that fall out of compliance with the CBLR framework to either return to full compliance or transition to the capital requirements applicable to other community banking organizations. The proposed extension of the length of time that community banks or their holding companies can remain in the CBLR framework while not meeting all of the qualifying criteria for the CBLR framework would be subject to a limit of 8 quarters in any 5-year period. The proposed change of the CBLR requirement from 9% to 8% allows more community banking organizations to qualify and encourages more eligible institutions to participate. Comments on the proposed rule will be due after it has been approved by the OCC and Federal Reserve and published in the Federal Register. Click to access the proposed rule.
Nutter Notes: Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) permits the federal banking agencies to establish a CBLR requirement of not less than 8% and not more than 10% for qualifying community banking organizations. That section of EGRRCPA provides that a qualifying community banking organization that exceeds the CBLR requirement will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the agencies' capital rules, among other benefits. In 2019, the agencies established a CBLR requirement of greater than 9% for banks and bank holding companies that have less than $10 billion in total consolidated assets. Other qualifying criteria for the CBLR framework include off-balance sheet exposures of 25% or less of total consolidated assets, and trading assets and trading liabilities of 5% or less of total consolidated assets, each as of the end of the most recent calendar. According to the FDIC, the banking agencies estimate that 84% percent of community banking organizations qualify to use the CBLR framework, but only 40% percent of them have opted to participate in the CBLR framework.
3. OCC Confirms National Banks’ Authority to Hold Crypto-Assets to Pay Gas Fees
The OCC published a new legal interpretation confirming that national banks may hold non-asset backed virtual currencies on balance sheet to pay transaction fees (commonly referred to as “gas fees”) in connection with national banks’ permissible crypto-asset custody services. The clarification was announced under OCC Interpretive Letter 1186, published on November 18, which also confirmed that national banks may hold “amounts of crypto-assets as principal necessary for testing otherwise permissible crypto-asset-related platforms, whether internally developed or acquired from a third party.” The authority of a national bank to hold on-balance sheet virtual currencies to cover gas fees was first announced in a conditional approval last month for an application to charter a new national bank “that plans to target its products and services to technology companies and ultra-high-net-worth individuals that utilize virtual currencies.” Click for a copy of OCC Interpretive Letter 1186.
Nutter Notes: The OCC interpretive letter does not specify what quantitative limits, if any, apply to a national bank’s authority to hold virtual currencies on balance sheet to cover gas fees or to test permissible crypto-asset-related platforms. A footnote in the interpretive letter did suggest that a national bank may not abuse this authority to impermissibly deal or invest in crypto-assets. So-called gas fees are transaction costs paid in a crypto asset (or a fractional share) to validators to execute operations on a blockchain network that requires validation, such as transferring cryptocurrency. Validators operate on the decentralized network of computers that perform the work of adding blocks of transactions to the blockchain. For blockchains that use crypto-mining to verify transactions on a blockchain, the gas fees are paid to the miners.
4. CFPB Announces Reconsideration of Small Business Lending Data Collection Rule
On November 13, the CFPB announced that it is finalizing amendments to its 2023 small business lending data collection rule under Regulation B, which implemented the federal Equal Credit Opportunity Act as amended by Section 1071 of the Dodd-Frank Act. The amendments extend the compliance dates set forth in the agency’s 2023 rule, and the agency is also reconsidering various aspects of the final rule. The extensions will give small business lenders--including banks--about one more year before they must report the demographics of small business borrowers, depending on a lender’s volume of covered originations. The CFPB also announced that it is considering a number of other changes to the rule, including coverage of certain credit transactions and financial institutions, the definition of “small business,” and the inclusion of certain data points and how they are collected. The CFPB indicated that the proposed changes would “streamline the rule, reduce complexity for lenders, and improve data quality, advancing the purposes of section 1071 and complying with recent executive directives.” Click for an unofficial redline compiled by the CFPB that shows the changes the proposed rule would make to the regulatory text and commentary of existing Regulation B.
Nutter Notes: The extensions to the compliance dates were originally granted an interim final rule in earlier this year in consideration of “court orders in ongoing litigation.” Under the 2023 small business lending rule, banks and other lenders will be required to collect and report data on applications for credit for small businesses, including those that are owned by women or minorities. According to the rule, a covered origination generally includes any extension of credit under Regulation B. The CFPB issued its final rule amending Regulation B to implement Section 1071 of the Dodd-Frank Act on March 30, 2023. Currently, compliance by the highest volume lenders—those that originated at least 2,500 covered originations annually—is scheduled to begin on July 1, 2026. Lenders in the next tier—those with volumes of at least 500 but less than 2,500 covered originations—will have until June 1, 2028, to begin complying with the rule. Those with volumes of at least 100 but less than 500 covered originations also will have until June 1, 2028. Importantly, as further described below, these changes all come in the backdrop of a recent court filing from the CFPB announcing that it is likely to run out of funding early next year, and results in increased uncertainty as to the status of CFPB itself, its rule-writing authorities, and necessarily the status of its current rule-writing activity. Institutions subject to the Equal Credit Opportunity Act should closely monitor legal developments relating to the CFPB’s funding and authority.
5. Other Developments: Core Processors and CFPB Funding
- OCC Looking Into Challenges Faced by Community Banks with Core Processors
The OCC has requested input from the community banks on the key challenges and barriers in in their engagements with their core service providers and other essential third-party service providers. The OCC’s request for information (RFI) announced on November 24 seeks information about challenges related to contract negotiations and terms, fees, billing practices, oversight, due diligence, innovation, core conversions, data access and modernization, and interoperability issues. Comments in response to the RFI will be due within 60 days after it is published in the federal register, which is expected shortly.
Nutter Notes: The RFI also seeks information about potential actions the OCC could take to address the challenges identified by responders, including with respect to burden reduction related to supervisory practices, policies, and published guidance, such as guidance on third-party risk management. Click for a copy of the RFI.
- CFPB to Court: Agency “Cannot Lawfully Draw Funds from the Federal Reserve”
The CFPB has announced that it has filed a notice informing a federal trial court that the CFPB can no longer draw funds from the Federal Reserve to support its operations. The CFPB’s decision is based on a legal opinion issued by the U.S. Department of Justice’s Office of Legal Counsel (OLC) on November 7, which advised that the CFPB, which is funded by the Federal Reserve’s “combined earnings,” may not legally request funds from the Federal Reserve under the Dodd–Frank Wall Street Reform and Consumer Protection (Dodd–Frank) Act if the Federal Reserve is operating at a loss by interpreting the word “combined earnings” to mean operating at a profit.
Nutter Notes: In the court filing, the CFPB indicated that it has sufficient funding to last “at least” through the end of the year but “anticipates exhausting its currently available funds in early 2026.” If left unremedied, it appears that the CFPB would be forced to cease operations next year. Ceasing operations could result in a number of major legal issues and increased uncertainties, including whether the CFPB would transfer supervisory and rule-writing authorities in the event of a closure. It has been reported that the CFPB has already informed staff that it intends to transfer pending enforcement and other litigation activity to the U.S. Department of Justice as a result of the funding uncertainty. Click for a copy of the CFPB’s announcement. Click for a copy of the OLC’s opinion.
Nutter Bank Report
Nutter Bank Report is a monthly electronic publication of the Banking and Financial Services Group of the law firm of Nutter McClennen & Fish LLP. Chambers and Partners, the international law firm rating service, after interviewing our clients and our peers in the profession, has ranked Nutter’s Banking and Financial Services practice among the top banking practices in the nation. Visit the U.S. rankings at Chambers.com. The Nutter Bank Report is edited by Matthew D. Hanaghan. Assistance in the preparation of this issue was provided by Daniel W. Hartman and Heather F. Merton. The information in this publication is not legal advice. For further information, contact:
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Michael K. Krebs Tel: (617) 439-2288 |
Matthew D. Hanaghan Tel: (617) 439-2583 |
Daniel W. Hartman |
Kate Henry khenry@nutter.com Tel: (617) 439-2304 |
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This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.
