Compliance Update — Insights And Highlights April 2024

The second quarterly meetings for 2024 of the Bankers Compliance Task Force (BCTF) supported by Jones Walker were held on April 17 in Flowood, Mississippi, and April 18 in Collierville, Tennessee.
United States Compliance
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The second quarterly meetings for 2024 of the Bankers Compliance Task Force (BCTF) supported by Jones Walker were held on April 17 in Flowood, Mississippi, and April 18 in Collierville, Tennessee. The BCTF is a group of bankers from banks of all sizes who, among other things, meet quarterly to discuss and receive training on current compliance topics as well as legal and regulatory trends. Since 1993, the members of the BCTF have worked together to address mutual compliance problems and provide each other critical support and training under the leadership of a member-elected steering committee and the professional guidance of Jones Walker. At its April meetings, the BCTF discussed many topics relevant to our banking clients' ongoing regulatory compliance concerns, but the underlying theme of all the issues this quarter was risk management and mitigating risks through strong internal controls.

In fact, the importance of these internal controls was stressed by several Federal Deposit Insurance Corporation examiners from the Baton Rouge and Little Rock offices that we had the pleasure of hearing from. Internal controls include the bank's policies, procedures, and processes designed to mitigate and manage money laundering, terrorist financing, and other illicit financial activity risks and to achieve compliance with regulatory requirements of the Bank Secrecy Act (BSA).

The examiners provided an update on what they are seeing in BSA/AML/CFT combatting the financing of terrorism exams and made the group aware of developments to watch. The examiners started off with an emphasis on the importance of having a qualified BSA officer with sufficient resources and direct lines of communication with senior management and the board of directors. Additionally, banks should not designate a backup BSA officer in name only but one who is also knowledgeable and competent to take the place of the BSA officer at a moment's notice. The examiners from both regions noted that they are seeing unprecedented levels of turnover of BSA staff, and the bank's BSA responsibilities cannot stop when the BSA officer is absent. Succession planning and planning for the unexpected must be done.

Banks should also have an established training program for all employees and the board of directors that is tailored to each employee's specific job duties. BSA officers and staff must also receive ongoing training. It is important that sign-in sheets, materials, and dates of trainings are all documented. The examiners went on to say that BSA training should be related to the bank's specific policies and procedures.

FinTechs were also discussed by the examiners, who emphasized the importance of the involvement of BSA staff in the decision-making and implementation process related to engaging third-party vendors. Due diligence is extremely important. The examiners stressed the importance of open conversation with your bank's primary regulators prior to entering into any such relationship.

Additionally, training at the meetings was focused on understanding what is in a bank's insurance policy, how to manage third-party risks, and an update on the Department of Justice's Combatting Redlining Initiative and how strong policies, procedures, and practices can help mitigate a bank's risks in all areas of compliance.

Originally published April 25, 2024.

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