Fed Says Banks Responsible For Outside Vendors' Actions

Law360, New York (December 5, 2013, 5:07 PM EST) -- The Federal Reserve on Thursday told banks that they would be held responsible for any violations of federal banking regulations committed by third-party service providers, including compliance consultants.

The Fed's guidance comes as other regulators, including the Office of the Comptroller of the Currency, have heightened their focus on firms to which banks outsource loan reviews, audits, sales and marketing, and other operations. Any bank holding company, as well as senior management and directors of those firms, will be subject to enforcement and other actions if...
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