Comprehensive Banking Regulatory Compliance Checklist

Introduction

The banking industry is subject to numerous laws and regulations that aim to prevent financial crimes such as money laundering, terrorist financing, and other illicit activities. In the United States, banks must comply with various federal and state laws and regulations that govern their operations.

Key Aspects of Bank Operations

Anti-Money Laundering (AML) Compliance

Banks must have a risk-based AML compliance program that includes policies, procedures, and processes for identifying and mitigating money laundering risks.

Conduct thorough customer due diligence to understand the nature and purpose of customer relationships.
Identify and report suspicious activities to prevent money laundering and other financial crimes.
Implement effective monitoring systems to detect unusual transactions and patterns.

Customer Due Diligence (CDD)

Banks must conduct CDD to understand who their customers are, what type of transactions they are likely to engage in, and that their customers are not acting illegally.

Gather and verify customer information, including identification documents and proof of address.
Conduct regular reviews of customer accounts to ensure ongoing compliance with AML regulations.
Monitor customer activity for any suspicious patterns or behavior.

Politically Exposed Person (PEP) Status

Banks must determine whether their customers are PEPs and apply appropriate measures such as Enhanced Due Diligence (EDD).

Identify PEPs through various sources, including government lists and financial institutions.
Apply enhanced due diligence to PEP accounts, including increased scrutiny of transactions and customer activity.
Monitor PEP accounts regularly for any suspicious activities.

Sanctions Screening

Banks must ensure they do not conduct business or process financial transactions with sanctioned individuals, entities, and countries/geographic regions.

Use sanctions screening software to identify potential matches against global watch lists.
Conduct regular reviews of customer accounts to ensure ongoing compliance with sanctions regulations.
Monitor customer activity for any suspicious patterns or behavior.

Transaction Monitoring

Banks must have a transaction monitoring system that helps identify unusual and suspicious transactions that may be indicative of money laundering, terrorist financing, and other financial crimes.

Implement machine learning algorithms to detect anomalies in customer transactions.
Use real-time data feeds to monitor transactions as they occur.
Conduct regular reviews of transaction activity to ensure ongoing compliance with AML regulations.

Suspicious Activity Reporting (SAR)

Banks must have policies, processes, and procedures in place for completing, filing, and retaining SARs and supporting documentation.

Establish clear reporting procedures, including who is responsible for submitting SARs.
Conduct regular training on SAR requirements and procedures.
Monitor SAR activity to ensure ongoing compliance with AML regulations.

Cybersecurity and Financial Record-Keeping Laws

Gramm-Leach Bliley Act (Reg P)

Requires banks covered by this act to tell their customers about their privacy practices and explain to them their right to opt out if they don’t want their information shared with third parties.

Provide clear explanations of customer data sharing practices.
Offer customers the option to opt out of data sharing.
Monitor customer activity for any suspicious patterns or behavior.

Applies to all enterprises that process data about EU individuals, whether manually or through automated processes.

Implement data protection policies, including encryption and secure storage practices.
Conduct regular reviews of customer accounts to ensure ongoing compliance with GDPR regulations.
Monitor customer activity for any suspicious patterns or behavior.

Other U.S. Federal Laws and Regulations

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)

Conclusion

The banking industry is subject to numerous laws and regulations that govern its operations. By understanding these requirements and implementing effective compliance measures, banks can ensure they are meeting regulatory standards and preventing financial crimes.

To learn more about how Alessa’s banking compliance software can help you meet these requirements, contact one of our agents today!