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The Important “P”s of Compliance


Times change. I don’t think there is a single week that goes by that I don’t learn something new in the world of Banking Compliance. Whether there is a new regulation taking effect or just looking at an old requirement from a different perspective, there are three things which never change; every bank should have in place Policies, Procedures, and Processes.

It is important that a bank’s Board of Directors (those who are responsible for guiding/directing the institution) establish Policy. Policy is a foundation for communicating to employees what is to be done. Banks are to be organized and intuitive to its customers’ needs and wants. To know the products particular banks will offer to accommodate its customers with their banking needs and desires and to pay close attention when conversing, in order to quickly be able to serve.

Procedures approved by the Board of Directors are a guide for how something should be done. To know that when someone inquires concerning a mortgage loan the bank must have a written/signed application from the applicant. To know the difference between an inquiry and a true application, and how and when to respond to both.

Processes would be the series of actions or steps taken in order to achieve a particular end. To know that when an application is returned to the bank, the “clock” starts ticking for certain processes to be performed. To know that once the first step is taken, the second step is not far behind, and the third and the fourth and so on. All to be done in a timely manner and accurately.

Failure to comply with regulations, or to consistently miss a step in the processes, could lead to Regulatory criticism. The criticism could be in the form of verbal recommendations, reduction in compliance rating and if severe enough, a dip into the bottom line; yes, Civil Money Penalties.

Financial institutions outstanding in their field have established Policies, Procedures, and Processes
as their Prescriptions Promoting Profit.

Written by:

Dale L. Harris, CRCM