IntroductionThe banking industry is continuously under the watchful eye ofthe government and the Federal Reserve. The government is incharge of setting restrictions on the banking industrys borrowinglimits and the amount of deposits that banks hold in their vaults.These restrictions have a tremendous impact on bankingprofitability. It is a federal law that banks must stay complaint tobanking restrictions.
What is Compliance?Compliance is the act of adhering to a standard or a regulation. Compliance training is mandatory for all banking employees. This training tutorial will provide every employee with a basic knowledge about the compliance rules and regulations that pertain to their departments.
Compliance Training ObjectiveThis training is intended to provide participantswith a step-by-step guide for regulatorymanagement while following existing federal, stateand local regulatory laws corresponding to theBanking branch departments.
In this training course you will learn:What is regulatory compliance and it how it effectsDevon Bank. Knowledge of Devon Bank departmentalresponsibilitiesPenalties for noncompliance and institutional risks.How to Devon Bank employees avoid governmentpenalties and fines.Why compliance is important.
Federal RegulationsIt is Devon Bank’s responsibility to complywith all federal rules and regulations in everyaspect of its business.All employees are expected to comply withFederal rules and regulations.
FDIC Compliance GuidelinesCompliance examinations are the primarymeans the FDIC uses to determine whethera financial institutions is meeting itsresponsibility to comply with therequirements and proscriptions of federalconsumer protection laws and regulations.
FDIC ContinuedThe FDIC conducts three annual reviews todetermine whether of not an institution iscompliant to Federal regulations. The threesupervisory activities are complianceexaminations, visitations and investigations.
Who Regulates Devon Bank?Office of Comptroller of the Currency (OCC)Federal Reserve Member Banks (FRB)Federal Deposit Insurance Corporation(FDIC)Housing and Urban Development (HUD)
Compliance ExaminationsCompliance examinations are primarily doneto assess the quality of an FDIC- supervisedinstitutions compliance management systemTo implement federal consumer protectionstatutes and regulationsTo review compliance with relevant laws andregulationsTo initiate effective supervisory action whenelements of an institutions compliancemanagement system are deficient or asignificant violation of the law is found
Compliance VisitationsCompliance visitations are conducted by theFDIC to review the compliance posture ofnewly chartered institutions coming underFDIC- supervision, or in the interval betweencompliance examinations to review aninstitutions progress on corrective actions.
Institution AwarenessAll employees of Devon Bank should followthe rules and regulations when performingjob duties.Devon Bank is responsible for promotingawareness for violation of laws andregulations.
Regulatory ComplianceRegulatory compliance is the goal thatfinancial institutions aspire to reach in theefforts to ensure all personnel are complaintwith relevant laws and regulations.At Devon Bank, all employees are requiredto conduct business in a legal and ethicalmanner.
Things to RememberDo not discriminate against a client or employee because ofrace, gender, religion, national origin, color, age, disability,sexual orientation or preference or veteran statusCommit to the highest standard of business and ethical conductin all activities while representing Devon BankRespect the rights of othersAvoid conflicts of interest and self dealingBe award of laws, rules, regulations and policies that apply toyour jobPromote accuracy and truth in Devon Bank businesstransactionsMaintain absolute confidentiality regarding client’s recordsReport any perceived wrongdoing to your supervisor of theDevon Bank Compliance DepartmentDo not destroy any records except in accordance to Devon Bankpolicy
Devon Bank Branch OperationsThe Branch Operations goal is to serviceand provide products to all retail customers.Branch Operation oversee: TellersCustomer Service RepresentativesPersonal BankersBookkeeping/ Accounting
Branch Operation ResponsibilitiesOperations of individual branches need tobe examined, analyzed and evaluated inorder to ensure job duties are beingperformed.Branch operations other responsibilities aremanaging branches, ensuring adherence toDevon Bank standards and ensuring policiesare being upheld.
Now that you are aware of FDIC compliance guidelines that govern Devon Bank, we will next review responsibilites for the Lending Department.
Devon Bank Lending DepartmentLending has many function within Devon Bank. It is an important branch which allows Devon Bank to serve its customers by providing expertise in their knowledge of lending.It is vital for every lending assoicate to be knowledgable in lending federal rules and regulations
Next we will review Federal Rules and Regulations for the Devon Bank Commerical Lending Department
Devon Banks Commerical Lending Department RegulationsAmerican Disabilities Act The main aim of this disabilities act is tostop any kind of discrimination inemployment, transportation, public programsand services, telecommunications servicesand public accommodation.
Bank Secrecy ActThis act requires financial institutions in the United States to assist United States government agencies to detect and prevent money laundering.Financial institutions are required to keep records of cash purchases of negotiable instruments and file reports of cash purchases of these negotiable instruments of ten thousand dollars or more.
Patriot ActThe function of the Patriot Act is to deter and punish terrorist acts in the United States and around the world. The Patriot Act prevents, deters and helps prosecute international money laundering and financing of terrorism.
Anti-Money LaunderingDesigned to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low-and moderate- income neighborhoods.
Community Reinvestment ActDesigned to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low-and moderate- income neighborhoods.
DiversityBank employees must understand the challenges that come with diversity such as the aspect of cultures having different standars for communication and different beliefs.By eliminating sterotypes and embracing diversity, individuals will be able to work through those difference in their workforce and maximixe the productivity of the organization.
Elderly AbuseLegislation is being passed across the county due to many senior citizen being the victims of financial exploitaion. Should a bank fail to report suspicions of elder financial abuse, they will be held liable.
Regulation B:Equal Credit Opportunity Act (ECOA)Prohibits creditor practices that discriminate on thebasis of race, color, religion, national origin, sex,marital status or age (provided the applicant hasthe capacity to contract) to the fact that all or partof the applicants income derives from a publicassistance program.ECOA also applies to the fact that the applicanthas in good faith ecercised any right under theConsumer Credit Protection Act.
Bank Bribery ActAmends the federal bank bribery law. Prohibits any employees, officers, directors, agents and attorneys of financial institutions form accepting anything of value for or in connection with any transaction/exchange.
Regulation V: Fair Credit Reporting ActPromotes accuracy, fairness and privacy of personal information assembled by Credit Reporting Agencies.
Fair Lending LawEnsures equal objective and non-baised treatment of existing and prospective customers in all credit-related transactions are made.
National Flood Insurance Reform ActInstructs banks not to increase, extend or renew any designated loan unless the building, mobile home or any personal property.Securing the loan is covered by flood insurance for the term of the loan for the paricular type of property under the act.
Gramm-Leach-Bliley ActRequires financial institutions that offer customers financial services or products like financial or investment advice.Loans or insurance to explain their information sharing practices to their customers as well as to safeguard sensitive data.
Regulation C:Home Mortgage Disclosure Act (HMDA)This is intended to provide the public with loan data that can be used to help determine whether financial instituions are serving the housing needs of their communities.This requires certain lenders to collect data from the various types of home buying/ improvement loan application.
Information SecurityBank employees must understand the importance of protecting customer and employee information.Complying with the laws and regulations that required due diligence, following proper security policies and procedures, as well as reporting potential problems.
Regulation O: Insider LoansProhibits abuse of a bank by its own insiders.Regulation O covers insiders of the institutions correspondentsRequires special reporting and approval procedures for loans and insiders.Limits lending amounts to insiders.Reports loans at correspondents.
Federal Reserve Act 23A-Relations with AffiliatesRegulates transactions between a bank and it affiliates. The following transactions are not permitted by banks:Parent companys overdrawn checking account with bank subsidiaryPayment of organization costs by bank subsidiary
Federal Reserve Act 23B- Restricitons on Transactions with AffiliatesExpands the range of retrictions on transactions with affiliates.Any transaction by a member bank or its subsidiary with any person shall be deemed to be a transaction with an affiliate of such bank.
Regulation W: Transations between Banks and their AffiliatesImplements sections 23A and 23B of the Federal Reserve Act, which establish certain restrictions on and requirements for transactions between a member bank and its affiliates.It applies to all fedrally-insured depository instituions and requires that transactions between member banks uphold stipulations.
Regulation U:Securities Credit by BanksProvides certain requirements applicable to loans that are made for the pupose of enabling the borrower to puchase or carry margin stock.Requires U-1 form if loan collateralized by stocks, bonds etc. over $100,000.
Physical SecurityNational Institute for Occupational Safety and Health depicts workplace violence as any physical assault, threatening behavior or verbal abuse occurring in the work setting.Devon Bank employees should be knowledgeable and maintain awareness in regards to possible work place violence.
Real Estate LendingReminds institutions that strong risk management practice and appropriate levels of capital are essential elements of a sound commercial real estate.
Service Members Civil Relief ActOffers short-term financial and legal relief to military personnel and their dependants, by placing specific requirements on the financial service industy and legal system.It provides a wide range of protections for individuals entering, called to active duty in the military or deployed service members.
Sexual HarassmentIt is necessary for all employees to be knowledgeable in what is and what is not acceptable behavior at Devon Bank.In order to minimize the banks sexual harassment complaints, all employee should keep a look out for inappropriate conduct/language, speak up to prevent it and report incidents with the HR.
You have just completed the review ofFederal Rules and Regulation for the Devon Bank Commerical Lending Department Next you will complete the practice activities
Question #1Which regulation ensures bank employees protect customer and employee information:a) Bank Secrecy Actb) Anti-Money Laundering Actc) Information Securityd) Gramm-Leach-Bliley Act
Question #2Bank Secrecy Act requires Devon Bank to keep records of funds transferred and transmitted of…. a) $1,000 and higher b) $3,000 and higher c) $5,000 and up d) $10,000 and more
Question #3The function of the Patriot Act is to deter and punish terrorist acts in the United States:a) Trueb) False
Congratulations you have completed the Devon Bank Commerical Lending Compliance Training!