Financial institutions are also required to perform a risk assessment and to coordinate with third parties.
Federal and state financial regulatory agencies are requiring banks and other financial institutions to have policies in place in response to the current COVID-19 pandemic.
On March 6, 2020, the federal bank regulatory agencies―including the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC)―issued an Interagency Statement on Pandemic Planning, which requires financial institutions to have an adequate business continuity plan (BCP) to address the potential adverse effects of COVID-19 and other pandemics. The statement requires BCPs to provide a preventive program, a documented strategy scaled to the stages of a pandemic outbreak, a comprehensive framework to ensure the continuance of critical operations, a testing program and an oversight program to ensure that the BCP is reviewed and updated, as necessary. Financial institutions are also required to perform a risk assessment and to coordinate with third parties, especially critical service providers.
State financial regulators are also beginning to require prompt action in response to the COVID‑19 crisis. On March 10, 2020, the New York Department of Financial Services (NYDFS) sent emails to New York state-registered institutions, including banks and finance companies, requiring regulated institutions to identify, monitor and manage potential financial risks arising from the spread of the COVID‑19 virus. The NYDFS email also requires registered institutions to perform an assessment of credit and other risks related to the outbreak, and to provide assurance to the NYDFS that the institution is properly overseeing and managing the risks by responding to the NYDFS, in writing, describing the institution’s plans. Other states are expected to follow suit.
About Duane Morris
The Duane Morris COVID-19 Strategy Team is advising clients on all aspects of the legal implications of COVID-19 including contractual, employment, insurance and healthcare issues.
For More Information
If you would like more information about how your financial institution should address the COVID-19 pandemic and develop your own BCP, please contact Arthur A. Coren, S. Alan Rosen, Steven J. Sweeney, any of the attorneys in our Banking and Finance Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.