SMART Act of 2025
The SMART Act of 2025 (Supervisory Modifications for Appropriate Risk-based Testing Act) is designed to reduce regulatory burden for smaller, well-managed, and well-capitalized financial institutions—specifically insured banks and insured credit unions with consolidated assets of $6 billion or less. For these institutions, the bill creates a pathway to shift from full-scope, on-site examinations to alternating limited-scope examinations after a prior full examination, and it authorizes the combining of certain exam types (safety and soundness, consumer compliance, IT/cybersecurity) into a single, joint examination when requested. The act also requires agencies to issue implementing rules within 12 months and to maintain safeguards ensuring oversight and safety, including exceptions for enforcement actions or changes in control. In addition, the bill adds exam-practices requirements (lead by experienced examiners, minimized examiner counts and time on-site, scheduling flexibility, advance notice) and mandates annual congressional reporting with data on examination practices and examiner experience. In short, the bill is aimed at making examinations more efficient for small-to-mid-sized institutions while preserving core safety and regulatory objectives.
Key Points
- 1Eligibility and scope: Applies to insured depository institutions and insured credit unions with $6 billion or less in consolidated assets that are “well managed” and “well capitalized.”
- 2Examination design changes: After a full-scope on-site examination, the next exam would be a limited-scope examination; two or three examinations (e.g., safety/soundness, consumer compliance, IT/cybersecurity) may be combined and conducted at the same time upon request.
- 3Exceptions: Relief does not apply if the institution is subject to a formal enforcement action/order or if there has been a change in control since the last full-scope on-site examination.
- 4Rulemaking timeline: Federal banking agencies and the National Credit Union Administration must issue implementing rules within 12 months of enactment to establish procedures for limited-scope exams, review processes for material changes or noncompliance, and balancing streamlined examinations with ongoing oversight.
- 5Examination practices: For on-site exams of sub-$6B assets institutions, exams should be led by an experienced examiner, minimize the number of examiners and time on-site, be scheduled at a convenient time, and provide advance notice of issues to be covered.
- 6Transparency and data: Agencies must report annually to Congress on compliance with the new provisions and provide aggregate data on examiner experience, staff used, and time spent on-site for these examinations.
- 7Definitions: Reaffirms or clarifies terms for “well capitalized” and “well managed” for both banks and credit unions and defines “consumer compliance examination.”