I. INTRODUCTION
The Consumer Financial Protection Bureau (CFPB) has issued a compliance bulletin as a reminder that, with limited exceptions, persons in possession of confidential information, including confidential supervisory information (CSI), may not disclose such information to third parties.
Pursuant to authority granted under the Dodd-Frank Act, the CFPB has issued regulations that govern the use and disclosure of CSI. The CFPB expects all supervised financial institutions to know and comply with the regulations governing CSI, and provides the following guidance to assist with such compliance.
The bulletin was effective February 25, 2015, and applicable beginning January 27, 2015.
II. DEFINITION OF CONFIDENTIAL SUPERVISORY INFORMATION
“Confidential supervisory information” means:
CSI does not include documents prepared by a financial institution for its own business purposes and that the CFPB does not possess.
III. EXAMPLES OF CONFIDENTIAL SUPERVISORY INFORMATION
Supervised financial institutions and other persons that may come into possession of CSI should understand what constitutes CSI in order to comply with the applicable rules.
Examples of CSI include, but are not limited to:
Thus, CSI includes any workpapers or other documentation that CFPB examiners have prepared in the course of an examination. CSI also includes supervisory information requests from the CFPB to a supervised financial institution, along with the institution’s responses. In addition, any CFPB supervisory actions, such as memoranda of understanding between the CFPB and an institution, and related submissions and correspondence, are CSI.
IV. DISCLOSURE OF CONFIDENTIAL INFORMATION GENERALLY PROHIBITED
Subject to limited exceptions, supervised financial institutions and other persons in possession of CSI of the CFPB may not disclose such information.
V. EXCEPTIONS TO GENERAL PROHIBITION ON DISCLOSURE OF CONFIDENTIAL SUPERVISORY INFORMATION
There are certain exceptions to the general prohibition against disclosing CSI to third parties. A supervised financial institution may disclose CSI of the CFPB lawfully in its possession to:
Supervised financial institutions may also in certain instances disclose CSI to others with the prior written approval of the Associate Director for Supervision, Enforcement, and Fair Lending, or his or her delegee (Associate Director). The recipient of CSI shall not, without the prior written approval of the Associate Director, utilize, make, or retain copies of, or disclose CSI for any purpose, except as is necessary to provide advice or services to the supervised financial institution or its affiliate. Moreover, any supervised financial institution or affiliate disclosing CSI shall take reasonable steps as specified in the regulations to ensure that the recipient complies with the rules governing CSI.
Confidential information made available by the CFPB pursuant to 12 CFR Part 1070 remains the property of the CFPB. There are other important requirements relating to the disclosure of confidential information, including disclosure pursuant to third-party legally enforceable demands, such as subpoenas or Freedom of Information Act requests. Among a number of other requirements, a recipient of a demand for confidential information must inform the CFPB’s General Counsel of the demand.
VI. NON-DISCLOSURE AGREEMENTS DO NOT SUPERSEDE FEDERAL LEGAL REQUIREMENTS
The CFPB recognizes that some supervised financial institutions may have entered into third-party non-disclosure agreements (NDAs) that, in part, purport to: (1) restrict the supervised financial institution from sharing certain information with a supervisory agency; and/or (2) require the supervised financial institution to advise the third party when the institution shares with a supervisory agency information subject to the NDA. However, such provisions in NDAs between supervised financial institutions and third parties do not alter or limit the CFPB’s supervisory authority or the supervised financial institution’s obligations relating to CSI.
A supervised financial institution should not attempt to use an NDA as the basis for failing to provide information sought pursuant to supervisory authority. The CFPB has the authority to require supervised financial institutions and certain other persons to provide it with reports and other information to conduct supervisory activities, pursuant to the Dodd-Frank Act. Failure to provide information required by the CFPB is a violation of law for which the CFPB will pursue all available remedies.
In addition, a supervised financial institution may risk violating the law if it relies upon provisions of an NDA to justify disclosing CSI in a manner not otherwise permitted. As noted above, any disclosure of CSI outside of the applicable exceptions would require the prior written approval of the Associate Director for Supervision, Enforcement, and Fair Lending (or his or her delegee).