Banking Compliance – United States
The banking institutions should stay compliant with regulations and standards to preserve the reputation and integrity of the organization. As the banks contribute to the economy and society, they must stay safe from frauds, thefts, security concerns, and reputation damages.
Importance of Compliance Management in Banks
There is no doubt that the Banking sector has a significant impact on the US economy. However, financial institutions and banks in the US are heavily regulated with a massive number of regulations by anassortment of federal, state, and agencies such as FFEO, DOJ and acts such as FHA, FEMA, Freddie Mac, Fannie Mae, etc.
The Biggest Challenges to Banking Compliance
Despite the firm efforts by banks, they still are unable to dodge penalties, fines or legal issues. Recently, in 2020, the US experienced the highest number of bank fines globally. Some of the major challenges that banks in the US face are:
- Increased regulatory obligations
- Failure to risk assessment
- Combating cyber attacks
- Lack of consumer information protection
- Missing out on workforce resilience
- Lack of operational resiliency
Consequences of Non-Compliance in Banking
Monetary fines of as high as USD 5 million on an average
Legal proceedings that might lead to suspension of operations
Loss of brand reputation and retraction of loyal customers
Bring in Agility and Create Compliance System
Bring agility into the banking operation and ensure all the stakeholders are equally involved in the compliance management. Create a unified and centrally managed compliance system connecting departments and processes.
Cultivate Compliance Awareness and Practicality of the Laws
Cultivate compliance awareness and create understanding about the practicality of the prevailing banking regulations, standards across businesses functions, processes and translate them into operational requirements
Develop Risk Identification and Assessment Process
Develop risk identification and assessment process monitoring with risk register, risk score card and risk matrix. Include the habit of generating and visualizing compliance-related data and driving data-backed decision-making.
Enforce Policies & Implement Regulatory Change Management
Develop and enforce policies and standards for building the required corporate standards and deciding the individual business conduct. Stay connected with the changes in laws and regulations and revamp organizational policies accordingly.