A “range of deficiencies” by USAA Federal Savings Bank (FSB) of San Antonio, Texas, are outlined in a “comprehensive” cease and desist order issued by the national bank regulator Wednesday, which also limits the bank’s ability to add certain new products and services, expand its membership criteria and make incentive pay to some workers.
The Office of the Comptroller of the Currency (OCC) said order replaces prior cease and desist orders against the bank in 2019 and 2022.
“The OCC took this action based on unsafe or unsound practices relating to management, earnings, information technology, consumer compliance, and internal audit and suspicious activity reporting violations,” the OCC said in a release. “The bank also was not in compliance with OCC’s Heightened Standards requirements for large banks detailed at 12 CFR Part 30, Appendix D.”
The orders from five and two years ago, respectively (which remain in force), require the bank to take comprehensive corrective actions to enhance its risk governance, compliance risk management, information technology management, fraud risk management, and third-party, affiliate, and shared services risk management.
But the latest action also limits the bank in expanding products, services or membership criteria (customers at the bank must be eligible for membership – typically through membership in the armed services or a family member’s membership in order to receive services).
“The Bank shall not add any new product or service or expand its membership criteria without evaluating and documenting the compliance and operational risks posed by adding the new product or service or expanding its membership criteria, ensuring the Bank has adequate controls to mitigate such risks, and providing 90 days prior written notification to the Examiner-in-Charge,” the order states.
Further, the bank is barred from adding any new product or service “with medium or high compliance or operational risk.” Also, the bank may not expand its membership criteria without providing a written request to and receiving a prior written determination of no supervisory objection from the OCC’s examiner-in-charge.
On incentive-based compensation, the order bars “any incentive-based compensation payment to any covered individual” except as provided within the order. “Incentive-based compensation,” according to the order, includes variable compensation that serves as an incentive or reward for performance, except for compensation paid in accordance with a Long-Term Bonus Plan. This part of the order is effective April 1, 2025.
The order requires an annual plan detailing a proposed payment review process to ensure that any incentive-based compensation payments to any covered individual reflect any adverse risk outcomes. The plan requires (among other things):
- a list of covered individuals proposed by the bank;
- the definition of “adverse risk outcomes” that are based on “factors the bank will consider in determining the amount of incentive-based compensation payment to a covered individual.”
- A requirement that, for each incentive-based compensation payment to a covered individual, a written certification to the examiner-in-charge that the payment review process was followed and that the incentive-based compensation payment will reflect any adverse risk outcomes. USAA FSB shall provide such certification to the examiner-in-charge at least 30 days prior to making the incentive-based compensation payment to the covered individual.
- The bank ensures that no covered individual receives any incentive-based compensation payment in connection with their work at the bank.
OCC Issues Comprehensive Cease and Desist Order Against USAA Federal Savings Bank
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