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Banking Regulatory Compliance: A Comprehensive Guide
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The banking industry is subject to various laws and regulations that ensure compliance with Anti-Money Laundering (AML) requirements, cybersecurity standards, and financial record-keeping best practices. This guide provides a comprehensive overview of key points related to suspicious activity reporting, documentation, cybersecurity and financial record-keeping laws, U.S. federal laws applicable to banks, and concludes with the importance of compliance.
Suspicious Activity Reporting
- Banks must have policies and procedures in place for completing, filing, and retaining Suspicious Activity Reports (SARs) and supporting documentation.
- Protocols should be established for identifying and evaluating suspicious activity, reporting SARs to the Board of Directors or Senior Management, documenting decisions related to SAR filings, and closing accounts associated with SAR filings.
Documentation
- Banks’ AML compliance policies, procedures, and processes must be written down, approved by the Board of Directors, and noted in the board minutes.
Cybersecurity and Financial Record-Keeping Laws and Regulations
Several key laws and regulations related to data security and record-keeping are highlighted below:
Gramm-Leach Bliley Act (Reg P)
Requires banks to inform customers about their privacy practices and allow them to opt out of sharing information with third parties.
Sarbanes-Oxley Act (SOX)
Imposes stringent record-keeping requirements for public companies related to electronic financial records, including monitoring, logging, and auditing certain activities.
Payment Card Industry Data Security Standard (PCI DSS)
Requires banks to limit cardholder information access, implement administrative controls, and track account activity.
23 NYCRR 500
Applies to banks under the NYDFS supervision, requiring them to assess their specific risk profile, design a robust compliance program, and file an annual certification detailing their compliance efforts.
EU-General Data Protection Regulation (GDPR)
Applies to all enterprises processing data about EU individuals, outlining security guidelines for both data processors and controllers.
U.S. Federal Laws Applicable to Banks
The following U.S. federal laws and regulations provide consumer safeguards and ensure transparency and fairness within the banking industry:
- Americans with Disabilities Act (ADA)
- Bank Service Company Act
- Community Reinvestment Act
- Consumer Financial Protection Act
- Coronavirus Aid, Relief and Economic Security Act (CARES Act)
- Credit Card Accountability Responsibility and Disclosure Act
- Dodd-Frank Wall Street Reform and Consumer Protection Act
- Economic Growth, Regulatory Relief and Consumer Protection Act
- Electronic Fund Transfer Act (Reg E)
- Equal Credit Opportunity Act (Reg B)
- Expedited Funds Availability Act (Reg CC)
- Fair and Accurate Credit Transactions Act
- Fair Credit Reporting Act (Reg V)
- Fair Debt Collection Practices Act
- Fair Housing Act
- Federal Reserve Act
- Flood Disaster Protection Act
- Garnishment Rule
- Home Mortgage Disclosure Act (Reg C)
- Homeowners’ Loan Act
- Military Lending Act
- NACHA International ACH Transaction Rule
- Real Estate Settlement Procedures Act
- Right to Financial Privacy Act
- Servicemembers Civil Relief Act
- Telephone Consumer Protections Act
- Truth in Lending Act (Reg Z)
- Truth in Savings Act (Reg DD)
- Unlawful Internet Gambling Act (Reg GG)
Conclusion
The guide emphasizes the importance of compliance for banks and other institutions involved in the movement of funds and processing of personal information. With regulatory scrutiny intensifying, compliance must be a top priority to prevent breaches and mitigate potential losses.