The OCC has released another set of updates it says will reduce regulatory burden for Community Banks and support their ability to compete and grow. These newest actions include tailoring BSA and AML exam procedures, ending the Money Laundering Risk (MLR) system data collection, launching an RFI on core providers, and signaling a proposal to reduce the Community Bank leverage ratio.
They arrive alongside two additional announcements that expand this shift. The agencies finalized a major change to the enhanced supplementary leverage ratio for GSIBs, and the OCC proposed a new Community Bank Leverage Ratio (CBLR) framework with an increased eligibility threshold of thirty billion in assets. Together, these actions reflect a wider reshaping of how capital and supervision are calibrated across the banking system.
Viewed individually, each announcement looks like a targeted adjustment. Viewed together, they fit a much broader shift that has been unfolding since September, when the OCC began redefining what it means to be a Community Bank and signaled the move away from prescriptive oversight toward judgment, evidence, and governance maturity.
Connecting the Pattern Across Recent OCC Announcements
In late September, the OCC announced a major reorganization that expanded the Community Bank category to include institutions up to thirty billion in assets. This change widened the peer group and brought more sophisticated supervisory expectations into the Community Bank line.
Two weeks later, the OCC issued its 2026 supervisory reset. This reset eliminated fixed procedural requirements and prescriptive exam cycles for Community Banks. Examiners will now tailor scope and timing based on a bank’s governance maturity, internal monitoring, and risk posture.
By mid October, the OCC made clear that simplification does not reduce expectations. Lighter checklists do not change the need for evidence of control effectiveness and sound governance. Responsibility shifts inward, not outward.
Most recently, the OCC’s response to the AWS outage confirmed operational resilience expectations have not changed. Vendor oversight, continuity planning, and fourth-party risk remain non-negotiable. The tone toward Community Banks may be more collaborative, but when it comes to resilience, exam expectations look very much the same.
These shifts set the context for understanding the OCC's latest actions.
How the Latest OCC Actions Continue the Shift
The most recent OCC announcements extend the same supervisory philosophy to BSA/AML, third-party oversight, and capital.
Tailored BSA/AML exam procedures move away from a minimum set of tests and toward risk-based, bank-specific assessments. Ending the MLR data collection signals a shift toward bank-generated intelligence and examiner judgment. The RFI on core processors acknowledges structural constraints that shape Community Bank competitiveness and previews future expectations for transparency in critical vendor ecosystems.
The OCC’s proposal to reduce the CBLR and expand eligibility to institutions up to thirty billion in assets reinforces this approach. The proposal contemplates a capital framework that is more tailored, more risk sensitive, and more dependent on each bank’s internal assessments.
Finally, the simultaneous adoption of a new enhanced supplementary leverage ratio standard for GSIBs further indicates that capital supervision is moving away from rigid constraints and toward a tailored framework centered on risk-based measures, buffers, and calibration.
The Common Thread
Across all of these changes, one theme is consistent. The OCC is reducing procedural supervision and placing greater reliance on each bank’s governance, documentation, and monitoring.
Checklist supervision is declining. Examiner judgment now plays a larger role in how exams are scoped and evaluated. Greater weight is being placed on a bank’s own BSA/AML program, third-party oversight, capital planning, and internal reporting to demonstrate effectiveness without relying on prescriptive procedures or checklists. Capital requirements are now part of the same move toward flexibility, risk sensitivity, and reliance on internal assessments.
The opportunity is significant for well-managed institutions. The exposure is equally significant for institutions that rely too heavily on legacy exam cycles or prescriptive checklists.
What Community Banks Should Do Now
Community Banks can prepare by strengthening the practices examiners will rely on most. Priority areas include:
- Improving governance evidence and board reporting
- Building reliable BSA/AML self-testing and monitoring
- Mapping third-party and fourth-party dependencies and documenting oversight
- Linking capital planning more clearly to risk posture and internal metrics
These are the areas that will determine exam scope, credibility, and supervisory confidence under the OCC’s evolving model.
Explore the Framework
iKinetiq's TPOC Risk Framework helps Community Banks translate examiner expectations into measurable governance maturity and stronger control effectiveness. It provides a structured, data driven way to anticipate supervisory focus areas, demonstrate control reliability, and maintain readiness in an environment where oversight depends on internal judgment and defensible evidence rather than fixed exam checklists.
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