Learning from the Mistakes of Other: Matter Requiring Attention

Author: Kenneth Simmons, CAMS-Audit

There are a myriad of compliance related regulations that financial institutions must comply with. In most cases, the accompanying regulations provide specific expectations for compliance. Disclose this here; provide a notice there; submit your report annually; and keep away from unfair and deceptive practices. Compliance regulations typically include one-size-fits most expectations. Over the years, we have experienced changes to various regulations, such as Truth-in-Lending and RESPA. These adjustments are relatively slow to progress. Financial institutions have the opportunity to grasp expected changes and understand how to comply, often before the regulatory changes occur and make the necessary adjustments to internal controls to comply with the changes.

The Bank Secrecy Act is the most challenging compliance requirement facing financial institutions of any decade. Banks are required to comply with transaction monitoring and reporting requirements. FinCEN and other supervisory agencies have written line item instructions to comply with these requirements. More menacing though, are the requirements to identify, monitor, and report suspicious activity as this can be a very subjective process. This challenge directly relates to RISK. The volume of risk is broad and the level of risk is bank specific.

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