Thinking Ahead

Regulatory enforcement actions related to the Bank Secrecy Act, Suspicious Activity reporting and Anti-Money Laundering requirements have raised increased awareness for bankers that will continue throughout the coming years. Financial institution compliance managers must also continue to focus on all the other compliance regulation requirements to avoid technical exceptions during routine and regulatory reviews. Because compliance managers are expected to juggle this myriad of issues on a daily basis, risk management of compliance issues becomes more critical every day.

Bank Secrecy Act and Anti-Money Laundering

The Bank Secrecy Act includes numerous requirements for financial institutions and other businesses. Among those are the reporting of currency transactions exceeding $10,000 to the Internal Revenue Service, exempting certain transactions from the reporting requirements, monitoring those exemptions, record retention requirements, developing an effective anti-money laundering program, verifying customer identification as mandated by the USA Patriot Act, identifying and monitoring high risk accounts and comparisons of customers or potential customers to various government lists. To complicated matters for financial institutions each regulatory agency has issued their own examination procedures in the past. The Federal Insurance Deposit Corporation (FDIC) has issued the most recent and comprehensive examination procedures to date. The regulatory agencies' uniform examinations procedures are being used and this area is receiving intense regulatory scrutiny. Our CompliancePro® system contains the regulatory examination procedures.

Technical Exceptions

Technical exceptions to regulations can occur during regular examinations performed by regulatory agencies or internal compliance managers. These exceptions can occur because management has not devoted sufficient resources to the compliance department for proper monitoring, risk management and training. Once technical exceptions occur they can expose the financial institution to increased scrutiny in all areas and result in additional regulatory oversight and increase the frequency of examinations.

Risk Management

Risk management continues to be an important factor in managing compliance functions. The importance of measuring compliance risk, across all lines of business, increases daily because financial institutions are expected to comply with an escalating number of regulations. Implementing an effective risk management program to measure inherent and residual risk allows the financial institution to develop a compliance monitoring program specifically tailored for their institution.

American Bank Systems, Inc., through its various affiliates, offers compliance solutions for financial institutions of all sizes and complexities. Our CompliancePro® software system is designed to assist your institution in achieving a comprehensive and cohesive risk management program. We also offer compliance audit outsourcing services through ABS Consulting Services, LLC. The entire ABS staff is dedicated to keeping abreast of the issues important to the banking industry and assisting our clients in meeting their compliance needs.

Info provided by Gina Ellis, CRCM