The US Office of the Comptroller of the Currency (OCC) has updated its Bank Secrecy Act and Anti-Money Laundering (BSA/AML) examination procedures for community banks, introducing changes that will take effect from 1 February 2026.
According to Moody’s, the revised framework is intended to streamline supervisory reviews while preserving strong protections against financial crime, reflecting a more proportionate approach to how smaller institutions are assessed.
Fraud and financial crime continue to pose a material risk to the global financial system, and US regulators have consistently underlined the importance of vigilance. By refining how BSA/AML examinations are conducted for community banks, the OCC is seeking to strike a balance between efficiency and effectiveness. The regulator’s view is that a more tailored supervisory approach will allow these institutions to allocate resources more precisely to the areas that present the highest risk.
For risk and compliance teams within community banks, the update represents a procedural shift rather than a rollback of expectations. It creates an opportunity to strengthen governance, refine internal controls, improve operational focus and reinforce confidence among regulators and customers that financial crime risks are being managed appropriately.
Community banks play a central role in the US financial ecosystem, supporting local economies through lending, deposit accounts and other essential services. However, many have argued that applying the same compliance expectations used for large, complex institutions can place a disproportionate burden on smaller banks. The OCC’s revised procedures are designed to ease unnecessary strain without undermining the integrity of the wider financial system.
At the heart of the update is a clearer endorsement of a risk-based approach to AML supervision. The OCC is recognising that community banks typically present a lower exposure to money laundering and terrorist financing than their larger counterparts. As a result, examinations may focus more closely on areas of elevated risk rather than applying uniform scrutiny across all activities.
The regulator is also introducing Community Bank Minimum BSA/AML Examination Procedures, aimed at simplifying supervisory steps for smaller institutions. While the process may be more streamlined, core requirements remain firmly in place. Community banks will still be expected to maintain effective customer due diligence, suspicious activity reporting processes, sanctions screening and broader AML controls.
Importantly, the revised procedures remain aligned with standards set by the Federal Financial Institutions Examination Council. While larger US banks will continue to be assessed under the full FFIEC framework, the OCC’s approach introduces greater proportionality for community banks while maintaining consistency across supervisory practices.
The update primarily affects OCC-supervised community banks, generally defined as depository institutions with less than $30bn in total assets. These banks typically serve local markets and generate most of their revenue from net interest income linked to consumer, small business and mortgage lending. Although the changes may reduce some regulatory friction, expectations around robust anti-financial crime frameworks remain unchanged.
For compliance teams, the OCC has been clear that reduced burden does not equate to relaxed enforcement. Examiners will still expect strong AML controls, and weaknesses could result in enforcement actions or civil money penalties. The updated procedures give examiners greater discretion, including the ability to rely on prior conclusions, independent testing and tailored transaction testing requirements.
In practical terms, community banks may want to review and refresh risk assessments, ensure transaction monitoring systems remain effective, maintain comprehensive documentation and prepare proactively for future examinations. Ahead of February 2026, conducting gap analyses, engaging internal and external stakeholders and reinforcing staff training may help institutions stay aligned as supervisory expectations evolve.
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