FFIEC Announces Final Update for Examination Modernization Project

On January 21, 2022, the Federal Financial Institutions Examination Council ("FFIEC") issued a final statement presenting the results of the Examination Modernization Project ("Project") reaching its final phase.

The Project was launched by the FFIEC to “identify and assess improvements to the effectiveness, efficiency, and quality of examination processes with respect to community financial institutions, and to minimize regulatory burden.”

The initial phase of the Project involved solicitation of examiners and supervised financial institutions’ commentary on the examination processes so that the FFIEC could determine how to lessen the regulatory burden on community financial institutions without impacting the efficacy of the process. 

During the final stage of the Project, FFIEC members reviewed the feedback of the supervised institutions relating to (1) redundant and/or duplicative examination information requests; and (2) differing and cumbersome authentication requirements to access FFIEC members’ supervision systems. As a result of this review process, the FFIEC established the following best practices for financial institutions to follow when requesting examination information:

• information requests should be risk-focused and relevant to an examination;

• supervised institutions should be allowed sufficient time to produce requested information;

• examiners should coordinate information requests among the exam team to avoid duplication and redundancy;

• requests should be made through an institution’s designated regulatory examination point-of-contact; and

• requests should be clearly articulated in writing.

Financial institutions should review these best practices and ensure compliance to ensure their examination process is conducted in the most apt manner.