LAS VEGAS (10/28/14)--The best and worst in compliance practices were featured during Monday's sessions at the Credit Union National Association's Bank Secrecy Act (BSA) Conference. Credit union personnel shared ways they stay out of trouble when it comes to regulations, while an attorney experienced in financial regulation shared some of the most common errors she has seen.
|Heidi Wicker, an attorney specializing in regulatory issues for financial institutions, shares some common factors in financial institutions that have had Bank Secrecy Act violations. (CUNA Photo)|
Joanne Broderick, compliance consultant with the Pennsylvania Credit Union Association, outlined a number of things that must be in place to protect a credit union from compliance, strategic and reputation risk.
"A good risk assessment helps you to develop the applicable policies and procedures that you need to have in place, find systems that will help you and have internal controls you can put into place, and the result then is a risk-based compliance program with internal controls, an annual audit program with a named BSA compliance officer and annual training," she said. "That's what examiners are looking for, that whole package."
She stressed that risk assessments should be in compliance with the USA PATRIOT Act, the BSA, Currency and Foreign Transactions Reporting Act, Office of Foreign Assets Control (OFAC) rules and all related rules and regulations. It should be updated at least every 12 to 18 months.
When that doesn't happen, regulators often assess civil money penalties and other enforcement actions. Heidi Wicker, an attorney who advises financial institutions on the latest in legal issues, addressed seven recent enforcement actions from the Federal Financial Institutions Examination Council (FFIEC).<\/p>
Six banks and one credit union have been subject of recent FFIEC enforcement actions in 2014, subject to a total of $2.1 billion in civil money penalties. Wicker said that these institutions often have a lot on common when it comes to BSA shortcomings.
In many cases, the financial institution simply failed to conduct proper due diligence, ignored certain staff departments who did notice that something was amiss, failed to properly train compliance personnel, all while lacking the internal controls meant to alert them of such shortcomings.
"BSA officers and staff lacking necessary resources and expertise is a common theme we'll see in a number of these actions. Sometimes there isn't good communications to set expectations at the board level of what resources the compliance department needs," she said. "It's also important for compliance to have enough authority and confidence to implement a solution, or go around someone who isn't part of the solution to get the support they need."
The credit union case she cited was that of community development credit union in Florida with more than $4 million in assets. The credit union was the subject of a cease-and-desist order last year from the National Credit Union Administration, for BSA violations.
It was given 60 days to complete a full BSA/anti-money laundering/OFAC assessment.
The joint CUNA/NASCUS conference continues today through midday Thursday. Watch News Now for more articles.