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,state and local regulatory laws corresponding tothe Banking 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 inevery aspect of its business.All employees are expected to comply withFederal rules and regulations.
FDIC Compliance GuidelinesCompliance examinations are the primarymeans the FDIC uses to determinewhether a financial institutions is meetingits responsibility to comply with therequirements and proscriptions of federalconsumer protection laws and regulations.
FDIC ContinuedThe FDIC conducts three annual reviewsto determine whether of not an institutionis compliant to Federal regulations. Thethree supervisory activities are complianceexaminations, visitations andinvestigations.
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 primarilydone to assess the quality of an FDIC-supervised institutions compliancemanagement systemTo implement federal consumer protectionstatutes and regulationsTo review compliance with relevant lawsand regulationsTo initiate effective supervisory actionwhen elements of an institutionscompliance management system aredeficient or a significant violation of the
Compliance VisitationsCompliance visitations are conducted bythe FDIC to review the compliance postureof newly chartered institutions comingunder FDIC- supervision, or in the intervalbetween compliance examinations toreview an institutions progress oncorrective actions.
Compliance InvestigationsCompliance investigations are conductedprimarily to follow-up on particularconsumer inquiries or complaints,including fair lending complaints.
Institution AwarenessAll employees of Devon Bank shouldfollow the rules and regulations whenperforming job 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 arecomplaint with relevant laws andregulations.At Devon Bank, all employees arerequired to conduct business in a legaland ethical manner.
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 ethicalconduct in 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 DevonBank policy
Now that you are aware of FDIC compliance guidelines that govern Devon Bank, we will next review responsibilites for the Senior Management Department
Senior Management IntroductionSenior Management are the department heads for each area of the bank.Senior Management oversee all departments within Devon Bank ensuring that compliance of the rules and regulations are being upheld.
Devon Bank Senior Management RegulationsAmerican Disabilities Act:The main aim of this disabilities act is tostop any kind of discrimination inemployment, transportation, publicprograms and services, telecommunicationsservices and 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 LaunderingAre procedures, regulations or laws created to stop money launderers from making money coming from illegal or unethical sources look legitimate.
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 neighborhood.
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.
Fair Debt Collection Practices ActCurbs abusive debt-collection practices by promoting fair debt collection and providing consumers with an opportunity for disputing and obtaining validation of debt information in order to ensure the informations accuracy.
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-Bililey 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.
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, if any of the proceeds of the transacion are used for the benefit of or transferred to an affiliate.
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 banking stipulations.
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.
Right to Financial PrivacyProtects a customers financial privacy, while still fulfilling the needs of government agencies.Specifies when and under what conditions, a financial institution may release customer financial records to a federal government authority, pursuant to customer authorization, a search warrant, judicial subpoena or administrative subpoena or summons.
Sarbanes-Oxley ActProtects investors from the possibility of fraudulent accounting activities by corporations also mandates strict reforms to improve financial disclosures from corporations and prevent accounting fraud.
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 of Federal Rules and Regulations for the Devon Bank Senior Management Department Next you will complete the practice activities
Question #1Regulation C is intended to: a) Protect individual consumers engaging in electronic funds b) Provide the public with loan data that can be used to help determine whether financial institutions are serving the housing needs of their communities c) Provides guidance on real estate lending standards d) All of the above
Question #2Which does not apply to The National Flood Insurance Reform Act:a) Instructs banks not to increase loansb) Insures property only covered by flood insurancec) Instructs banks not to renew loansd) Renews loans not covered by flood insurance
Question #3The primary purpose of the Bank Secrecy Act is to prevent and detect money-laundering activity through financial institutions, casinos and certain other businesses in this country. a) True b) False
Congratulations you have completed the Devon Bank Senior Management Department Compliance Training!