On June 6, 2023, the Federal Reserve Board of Governors, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency jointly issued final third-party risk management guidance for supervised banking institutions, superseding all prior guidance. The final guidance includes a number of risk management principles across the life cycle governing banks' third-party relationships. It is effective immediately.
The final guidance is broad in scope: among other areas, it describes principles applicable to the diligence and the selection of a bank's third-party relationships, as well as ongoing monitoring, and considerations for termination of relationships. It adopts a principles-based and tailored approach for all different types of third-party relationships – including fintech partnerships – and is expected to be updated in the future to provide additional resources for community banks.
While the final guidance is directed specifically at banking organizations, it is critical that banking organizations, third parties, subcontractors, and service providers understand how the final guidance could impact them. DWT offers this practical resource as a means of understanding the final guidance across the life cycle of third-party relationships.