OCC’s Hsu: ‘Sense of fairness’ key to bank compliance initiatives


The acting head of the Treasury Department’s Office of the Comptroller of the Currency (OCC) argued banks should adopt a “strong sense of fairness” to bolster the effectiveness of their compliance programs, particularly regarding lending decisions guided by artificial intelligence (AI) and machine learning (ML) tools.

“Banks’ deployment of more and better resources can improve the effectiveness of their compliance risk management programs, as can their adoption of modern technologies. In many cases both are necessary. But they may not be sufficient,” said Michael Hsu in a speech delivered Monday at an industry event. “In environments of change, executing well-designed and resourced compliance programs is just half the challenge. The other half is adapting and anticipating where compliance risks are likely to emerge. To do that, having a strong sense of fairness can be important.”

Hsu said several of his predecessors have stressed mere compliance with laws and regulations is not sufficient. With the growing complexity of bank products, the digitization of banking, and the increasing awareness of inequalities in the banking system, Hsu said instilling a sense of fairness in a bank’s compliance risk management is a challenge but also an opportunity.

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