Bank Compliance Programs

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A bank compliance program is the method that a bank uses to abide by all applicable regulations, rules and laws. Each bank is responsible for developing a sound and safe compliance program that takes into account the risks involved for the protection of the bank's clients, reputation, employees and overall business efforts. Banks appoint management-level compliance officers in order to develop compliance policies and procedures, monitor and test programs, train employees, render advice, report results and handle the general management of the compliance department.

What are bank compliance programs?
What are bank compliance programs?

Policy and Procedures

The chief compliance officer is responsible for developing policies and procedures that are in conformity with legal and regulatory guidelines for all aspects of the bank's business. For example, consumer compliance regulations that deal with truth in savings and lending must be drawn up and approved by the board of directors of the bank. These policies and procedures must be incorporated into the workflow of the bank.

Specific compliance policies and procedures must be developed by each bank based upon its unique circumstances.
Specific compliance policies and procedures must be developed by each bank based upon its unique circumstances.

Monitoring and Testing

Compliance officers must conduct regularly scheduled compliance reviews in order to monitor the effectiveness of the compliance policies and procedures and to spot-check that they are being followed. For example, Regulation J, which deals with the time frames for check clearing, must be tested in order to make sure that the proper amount of clearing days is being assigned to each check.

The compliance department of the bank must ensure that the policies and procedures of the bank are being adhered to by the relevant departments of the organization.
The compliance department of the bank must ensure that the policies and procedures of the bank are being adhered to by the relevant departments of the organization.

Training

The compliance department must provide all employees of the bank with adequate and effective training concerning all policies and procedures of the bank. Each employee must be tested for comprehensive understanding. Some policy and procedures testing, such as concerning the "Bank Secrecy Act" and the "Money Laundering Act," must occur on an annual basis.

The compliance department is responsible for training and testing all new and existing staff on compliance issues.
The compliance department is responsible for training and testing all new and existing staff on compliance issues.

Providing Advice

During the course of any one day, many compliance questions arise from the employees of other departments within the bank. The compliance department is charged with the responsibility of giving advice concerning all questions of compliance control and application.

Compliance department staff is responsible for dispensing compliance advice to other employees of the various departments.
Compliance department staff is responsible for dispensing compliance advice to other employees of the various departments.

Reporting

The compliance officers of a bank must provide reports to other areas of the bank concerning the results of compliance reviews and training. They must also report changes in laws that result in policy amendments and new policies developed in accordance with new legislation. All changes to the compliance program of the bank must be cleared through and approved by the board of directors.

The compliance department provides reports to other departments of the bank and makes changes to policies and procedures.
The compliance department provides reports to other departments of the bank and makes changes to policies and procedures.

Management

The chief compliance officer must manage the compliance staff under his control in order to provide for adequate coverage of all compliance program functions including the goal of safety and soundness regarding banking regulations.

The chief compliance officer must manage the other members of his department.
The chief compliance officer must manage the other members of his department.

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