by Regulation YY, also known as “Enhancing Corporate Governance for Banks Supervised by the Federal Reserve,” is a regulation issued by the Federal Reserve Board in the United States. It is intended to enhance the corporate governance of bank holding companies (BHCs) and foreign banking organizations (FBOs) supervised by the Federal Reserve.
Regulation YY applies to bank holding companies (BHCs) and foreign banking organizations (FBOs) that are supervised by the Federal Reserve. It applies to these companies regardless of their size, type or location. The regulation applies to all aspects of corporate governance of BHCs and FBOs including, but not limited to:
- Corporate governance standards: BHCs and FBOs are required to establish and maintain corporate governance standards that are consistent with safe and sound operations and that promote the safety and soundness of the organization.
- Director qualifications: BHCs and FBOs are required to have a majority of their directors be independent, and to establish and maintain qualifications for directors.
- Risk management and internal controls: BHCs and FBOs are required to have effective risk management and internal control systems in place.
- Compliance with laws and regulations: BHCs and FBOs are required to have effective compliance programs in place to ensure compliance with applicable laws and regulations.
- Disclosure: BHCs and FBOs are required to disclose information about their corporate governance practices to the Federal Reserve and the public.
The regulation applies to all aspects of corporate governance of BHCs and FBOs, it requires them to establish and maintain effective risk management systems, internal controls, and compliance programs that are designed to ensure compliance with laws and regulations and to promote the safety and soundness of the organization.
