How to Build a Stronger Compliance Management Program in Your Bank

by Brad Garland
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While a successful and robust compliance management program in banks has a few basic components, there are no “one size fits all” rules. However, here are the vital elements that make up the backbone of an effective compliance management

  1. Internal Control – Such control is two-pronged. It evaluates whether compliance management solutions accomplish the expected goal and checks whether the procedures are being regularly enforced.
  2. Training – Learning keeps employees up-to-date on consumer protection rules and regulations, and your bank’s products and services. Regulatory compliance should become a habit, not something implemented just before an audit.
  3. Policies and Procedures – Sometimes, your bank may be required to follow multiple compliance standards – some of which may oppose each other. In such instances, it is important to have set guidelines as to which standard to follow and who makes the final call.
  4. Information System - An enterprise-wide, centralized, and standardized solution can help ensure that key players in your bank to better manage and track the relevant data regarding compliance: internal audit results, steps taken to tackle policy and compliance issues, etc.

The level of importance of each of these elements may differ, depending on your bank's specific requirements. It can also vary based on particular requisites during a specific time frame and the risk level. For instance, training will become the number one priority if your bank has a continuous string of new products and services to offer.


Tailor the Compliance Management Program to Your Bank

Evaluate your current compliance management program. See how your bank copes with the latest trends in the market place. Integrate new legislation into your bank’s regulatory compliance policy. Assess the risks in your bank’s main activities.

Compliance should be part of your bank’s strategic plan – work it into all your business decisions. You should appoint a compliance officer with the authority and qualifications to make decisions, with the understanding that accountability for such decision is a major part of the job description. If the experience is not there, then ensure the compliance officer has additional support and/or gets the training needed to ensure the bank isn't left exposed.

Make a compliance risk management program a part your bank’s daily operations. Keep it strong but flexible enough to accommodate changes. It is important to understand that there are instances when compliance standards may have to be overlooked, but in such cases, that decision should be made only after a thorough risk assessment study has been done.


Test and Review

It is difficult to stay focused on compliance every single day; the trouble is, this can soon become an unhealthy habit. Regular quality control checks and internal audits will help curb such an attitude. Conduct a critical study of the findings of internal audits. Ask your auditor and your compliance officer if they can identify the causes behind their findings. Their insights can be very helpful in both pinpointing the root cause and troubleshooting as you move forward in creating a culture of compliance. Armed with this information, take immediate steps to address the issue. If you need help finding the right compliance support for your bank, Garland Heart can help.