US Banks Raise Stakes for Managed Service Providers

For years now, the FFIEC (the regulating body for U.S. banks) has been increasing the amount of scrutiny and oversight for banks as it pertains to their use of MSPs. The FFIEC recognizes the importance of MSPs to assist banks with staying compliant with relevant banking regulations and practices. The FFIEC also recognizes that MSPs working with banks must be transparent and have a best practices approach to their managed services offerings.

What the joint statement from OFAC and the FFIEC does is increase the stakes for these banking institutions to include possible financial penalties. The specific wording from the joint statement is as follows:

"Continued use of products or services from a sanctioned entity, directly or indirectly through a service provider, may increase operational and OFAC compliance risk for a financial institution and could result in violations of law, civil money penalties, enforcement actions, and damage to the financial institution’s reputation."

The Takeaway for MSPs?

MSPs currently servicing (or wanting to service) U.S. banks, had better be prepared for increased scrutiny from government regulators. The scrutiny will not just be on the MSP; it will also include any third parties involved in the delivery of managed services to the banking client.

Practically speaking, this makes servicing banks even more of a specialty area for MSPs. It also means MSPs may want to look at increasing fees for banking clients to absorb the increases in certification, audits, and vendor management compliance costs necessary to keep the managed services supply chain transparent and compliant with FFIEC and OFAC rules.