The Fed is considering whether to examine compliance programs and governance at tech firms that serve the banking industry, a senior official said
The central bank is looking at whether to examine the compliance programs and governance structures at tech firms that provide data storage and services to the industry, Richard Ashton, deputy general counsel for litigation, enforcement and system matters, said Thursday at a conference in New York.
Financial regulators are allowed under the Bank Service Company Act to examine third-party vendors that provide core banking services, according to Mr. Ashton. As more banks outsource data management and other services to technology firms, regulators may be justified in strengthening their oversight, Mr. Ashton said.
Newsletter Sign-up “How far the authority goes to conduct examinations, I think, is something we are closely looking at,” Mr. Ashton said, speaking broadly about Fed enforcement priorities. “Is it something that we can look at the governance structure at these third-party providers? Can we look at their overall compliance management program?”
Mr. Ashton didn’t provide additional details about the central bank’s examination plans. His comments come four months after a hacker accessed personal information of 106 million credit-card customers that Capital One Financial Corp. had stored on Amazon.com Inc. ’s cloud service. Banks are ultimately responsible for managing the risks associated with vendor relationships, but in cases where several banks rely on the same third-party provider, regulators may have a bigger role to play, Mr. Ashton said.Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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