Financial Crime World

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Banking Regulatory Compliance Checklist: Avoid Financial Crimes and Cybercrimes

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As the frequency and sophistication of financial crimes and cybercrimes continue to rise, banks and other institutions involved in the movement of funds and processing of personal information are increasingly vulnerable. In response, regulatory scrutiny has intensified, making compliance a top priority.

Annual Program Assessment Required

To ensure effective compliance, banks must conduct an annual program assessment by independent third parties or bank staff with no responsibility for establishing or managing the program. The assessors should have sufficient knowledge and experience in AML compliance to fully evaluate the program.

Program Assessment Inclusions

The assessment should include:

  • Review of policies and procedures for compliance with existing regulations
  • Testing of internal controls
  • Evaluation of training program elements and training records

AML/CFT Compliance Requirements

Banks must comply with various AML/CFT requirements, including:

  • Customer Due Diligence (CDD) or Identity Verification: Accurately establishing customer information, including name, address, date of birth, identification number, beneficial ownership information, and business nature.
  • Politically Exposed Person (PEP) Status: Determining whether customers are PEPs and applying appropriate measures such as Enhanced Due Diligence (EDD).
  • Sanctions Screening: Ensuring non-compliance with sanctioned individuals, entities, and countries/geographic regions by screening applicable watchlists.
  • Transaction Monitoring: Identifying unusual and suspicious transactions indicative of money laundering, terrorist financing, and other financial crimes.
  • Suspicious Activity Reporting: Completing, filing, and retaining SARs and supporting documentation.

Cybersecurity and Financial Record-Keeping Laws and Regulations

Banks must comply with various laws and regulations to prevent breaches and mitigate potential losses. Key regulations include:

  • Gramm-Leach Bliley Act (Reg P)
  • Sarbanes-Oxley Act (SOX)
  • Payment Card Industry Data Security Standard (PCI DSS)
  • 23 NYCRR Part 500
  • EU-General Data Protection Regulation (GDPR)

U.S. Federal Laws Applicable to Banks

In addition to AML/CFT and cybersecurity regulations, banks must comply with various U.S. Federal laws, including:

  • Americans with Disabilities Act
  • Bank Service Company Act
  • Community Reinvestment Act

Conclusion

Compliance is a top priority in today’s financial landscape. By using a regulatory compliance checklist as part of a holistic approach to compliance, banks can ensure program adequacy and avoid financial crimes and cybercrimes.

Sources

  • FFIC BSA/AML Examination Manual
  • ABA Acts & Regulations