Starting Strong in Compliance – Your Guide to Success in a New Role

by Trey Anderson, J.D., Senior Consultant, Capco Academy

One of the key elements of an effective Compliance Management System (CMS) is performing ongoing compliance monitoring and testing. In our experience, partnering with financial institutions of all sizes, charters, and complexity, we have noted two common themes: 1. Some financial institutions are better at this than others; and 2. Some business units or departments are better at this than others. Therein lies the gap, and an opportunity that Capco is pleased to have addressed through the testing component of our CMS Solution...

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Navigating Incentive Compensation Programs- Managing the Risks of Incentive Compensation Programs

by Christopher Price, CAMS, AMLP, Senior Consultant, Regulatory Advisory Services

Incentive Compensation Programs (ICPs) can play a crucial role in driving the success of financial institutions. According to the Supplementary Information section of the Interagency Guidance on Sound Incentive Compensation Policies, ICPs can attract skilled staff, enhance organization-wide and employee performance, encourage employee retention, provide retirement security, and align personnel costs with revenues.

Given these benefits, it's no wonder financial institutions use them. However, compensation arrangements come with inherent risks. Inadequate risk management in ICPs has led to imprudent risks taken by both C-Level management and employees, risking possible reputation and consumer harm, as well as civil and criminal penalties. Over the last seven years...

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The Shield & the Sword: How the Three Lines of Defense Allow You to Avoid the Pain of Self-Reporting

by Becky Breland, J.D., Principal Consultant, Regulatory Advisory Services

Sometimes it is better to use your shield before falling on your sword.  A large regional bank in the Southeast recently learned that lesson.  The Federal Reserve Board imposed a staggering fine, of approximately $2.95 million for unsafe and unsound practices in the bank’s flood insurance compliance program and for flood insurance regulatory violations. The bank agreed to the fine, without admitting or denying the allegations, on August 14, 2023.  This is even though the bank self-reported the violations with respect to not effectively monitoring a significant number of home equity loans and home equity lines of credit.  According to a spokesman for the bank, “We took corrective action and remediated the issue by 2017. There was no customer impact as the matter was confined to our own internal monitoring of flood insurance policies on certain properties.”

Is Self-Reporting Still Beneficial in 2023?

Sometimes, we have to fall on our sword. Regulatory Advisory Services has long advocated when financial institutions identify regulatory violations during their monitoring processes, to self-report to their primary regulator that the violations were discovered and that, as applicable, corrective measures were undertaken to remedy those violations and prevent future violations from occurring...

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