What Is the Federal Financial Institutions Examination Council (FFIEC)?
The Federal Financial Institutions Examination Council (FFIEC) is an interagency body of the U.S. government made up of several financial regulatory agencies. The FFIEC was created on March 10, 1979, and is meant to promote consistent and uniform standards for financial institutions; the council also oversees the appraisal of real estate in the U.S.
- The Federal Financial Institutions Examination Council (FFIEC) is an interagency body of the U.S. government.
- The FFIEC has six member agencies that cooperate to set regulatory standards and principles for financial institutions.
- The FFIEC also trains examiners for its member agencies, to ensure uniform implementation of these standards throughout the industry.
- The FFIEC publishes guidelines for IT management, cybersecurity, and protection of consumer financial data.
- Failure to comply with FFIEC guidelines can result in fines and penalties for federally-supervised financial institutions.
Understanding the Federal Financial Institutions Examination Council (FFIEC)
The FFIEC was established in 1979, in accordance with the provisions of the Financial Institutions Regulatory and Interest Rate Control Act of 1978. It originally consisted of five federal agencies with roles in financial regulation.
The member bodies are:
- The Federal Reserve Board of Governors
- The Federal Deposit Insurance Corporation
- The National Credit Union Administration
- The Office of the Comptroller of the Currency, and
- The Consumer Finance Protection Bureau.
A sixth body, the State Liason Committee, was added as a voting member in 2006.
As an interagency regulatory body, the FFIEC creates uniform standards and principles for the examination of financial institutions by all of its composite agencies. It further makes recommendations intended to maintain uniformity in how financial institutions are regulated at the federal level.
The FFIEC develops standardized reporting systems for federally supervised banks and financial institutions, the holding companies associated with them, and the nonfinancial subsidiaries of both the financial institutions and their holding companies. In this capacity, the FFIEC trains examiners who work for the council’s member agencies. Those training programs are also open to employees of state regulatory agencies.
Failure to comply with FFIEC standards can result in fines and penalties, as well as reputational damage to a financial institution.
The FFIEC is responsible for creating standards and guidelines for financial institutions to adhere to federal laws and regulations, and for ensuring that these laws are enforced fairly and uniformly.
There are eleven categories of FFEIC regulations, ranging from information management and security to business development and continuity planning. These rules are intended to protect consumers from risks or mismanagement from their financial institutions.
In order to ensure compliance, the FFEIC has the ability to impose fines and other penalties on federally supervised financial institutions.
The FFIEC and Real Estate
In 1980, the council was given the responsibility of facilitating public access to mortgage information from financial institutions in accordance with the Home Mortgage Disclosure Act of 1975. HMDA asks lenders to identify the sex, race, and income of those applying for or obtaining mortgages. This data allows the FFIEC to monitor trends in housing and mortgage borrowing and lending, such as a reported increase in mortgage borrowing by blacks and Hispanics as of 1993.
Following the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the FFIEC established the Appraisal Subcommittee (ASC) to regulate real estate appraisal in the U.S. The ASC does this via the Appraisal Foundation, which is made up of the Appraiser Qualifications Board (AQB), the Appraisal Practices Board (APB), and the Appraisal Standards Board (ASB).
FFIEC and Cybersecurity
In 2013, recognizing the importance of online operations to modern finance, the FFEIC created the Cybersecurity and Critical Infrastructure Working Group. This body is responsible for creating practical compliance standards and principles across all financial regulators.
In order to ensure that the banking system remains secure, the Cybersecurity Working Group publishes regular guidance on the appropriate measures to protect consumer data, risks to the interbank messaging system, and the dangers associated with hacking and cyber extortion.
What Is FFIEC Compliance?
FFIEC compliance means adhering to the rules and standards set out by the Federal Financial Institution Examining Council. Failure to comply with these standards can result in fines and penalties for a financial institution.
Who Is Regulated by the FFIEC?
The FFEIC is responsible for creating uniform regulatory standards and reporting systems for all federally supervised financial institutions, as well as their holding companies and subsidiaries. In short, any institution that is regulated by one of the FFEIC member agencies is effectively subject to FFEIC rules.
What Is the FFIEC IT Handbook?
The FFEIC IT Handbook is a set of regulatory standards for banks and other financial institutions. These guidelines are used by federal examiners to determine if financial institutions are adequately identifying and managing the risks associated with banking infrastructure, electronic payments systems, IT auditing, and other intersections between finance and computer systems.
What Is the Difference Between FFIEC 031 and 041?
FFEIC 031 is a mandatory report on the condition and income of banks with foreign and domestic offices. FFIEC 041 is a consolidated report on the condition and income of banks with domestic branches only.
Does the FFIEC Regulate Credit Unions?
One of the member agencies of the FFIEC is the National Credit Union Administration, which supervises the charters and regulations for federal credit unions. Therefore, all credit unions fall under FFIEC regulations.