Virginia D. Hibbard, CAMS, CGSS

In just a little over two weeks, Kate Phillis, NCCO, NCRM and I will be attending our very first American Bankers Association #risk and #compliance conference in Seattle, and it seems like there’s no better time! The first sentence describing the very first general session kicks off like this: “There is a lot going on for risk and compliance officers….” It’s an understatement if there ever was one, with the extent of enforcement actions we’ve seen, the changing tides of BaaS, the ruling on CFPB funding that will get the gears turning for finalizing big, big rules like the 1033 data rule and small business banking requirements, and all of the little (big) things in between like repeated rounds of fintech partnership guidance, rising industry fraud loss, reg e wire lawsuits (🤷‍♀️?) and Zelle congressional hearings. In short, being a risk or compliance officer in the financial space is not for the faint of heart and the same old status quo won’t fly. The current environment requires much more of those of us within #banks, #creditunions, and #fintechs alike to be adaptable, strategic, and a bigger part of changing the narrative of the part these roles play in the larger ecosystem. We all benefit from access to other perspectives and the occasional challenge to our (sometimes) firmly held way of operating, and there’s no greater way to get there than bringing a significant group together in a setting such as this. We’d love to talk about the work we’re doing at Nymbus and to hear from others. If you’ll be there, reach out to either of us to connect! #banking #financialinstitutions #bankingtech #bsaofficers #complianceofficers #ABArcc

32

1 Comment

Why payments need to be borne as 'public goods'? This Federal Reserve Board Governor Waller's speech put it simpler (in 2 complementary ways): 1. Identifying the need and timing for technical standards, incorporating a breadth of industry perspectives, and aligning on implementation approaches requires 'coordination', and central banks play a key role as neutral conveners to harmonise efforts from all relevant stakeholders. 2. Leading by example, central banks' operated payment platforms provide expertise in the adoption of standards and best practices. RTGS systems remain as the backbone of the financial system, they serve as rails for safe and efficient settlement in central bank money #RTGS #payments #ISO20022 #standards #innovation

30

Thanks again to Rafael DeLeon of Ncontracts for allowing me to join the Ncast and for the great conversation that made recording this session such an easy one. Learn more about how we think about #risk and #compliance at Nymbus below: ⬇️ #banking #fintech #financialinstitutions #creditunion #generativeAI #complianceofficer #vendorrisk #bsaofficer #fraud

16

Not a question of “if”, fraud is a question of “when”. Attend and learn how you can better protect your company and yourself!

7

My firm's survey shows that most boards of financial institutions have not had the board oversight training on AML risk systems and practices. As a matter of fact, this training is a regulatory requirement and it exposes the bank (and other reporting entities) to compliance risk or regulatory sanctions. Understandably, getting the board together for any training is a daunting task. You can have the board members have the training in their own time on a plane or anywhere wheresoever. see: https://lnkd.in/dcUjHdKZ

1

We’ll return to our series of postings about AML system implementations, but we’d like to revisit our postings about recent #AML consent orders, and consider a letter recently written to federal regulators from the American Fintech Association (AFA). (link to the letter is included in comments). After reading the letter, you’ll see that the #AFA is suggesting that federal regulators are actually targeting banks that partner with Fintechs and offer #BaaS (Banking as a Service) services. If we look at recent AML consent orders, we’ll see quite a few for BaaS banks, but we’ll also see AML consent orders for non-BaaS banks, and most of these are smaller community banks. What’s concerning when reading the AML consent orders for non-BaaS banks is that they seem to be seriously missing the mark when it comes to #BSA compliance, with some of the pillars of BSA totally deficient, with at least one bank appearing to be deficient in all the pillars (they were required to perform a high risk lookback and a suspicious activity lookback review as well.) With this particular institution, it also appears that there was a exam letter that perhaps wasn’t heeded. It’s possible this prior exam letter included violations of law that were not addressed. So in one consent order we can see elements of what regulators have been speaking about in their various speeches and remarks. Financial institutions, especially the smaller ones, are still required to comply with BSA/AML/CFT requirements even when they are low risk. The belief that low risk equals no risk doesn’t hold up with BSA. We’ll continue to review consent orders and provide advice on how to avoid the findings listed in them. We are also available to perform a mock exam for your institution to give you insight as to what an examiner might find.

7

1 Comment

This new joint guidance from the Federal Reserve and others is a valuable resource for community banks, whose third-party relationships increasingly put their organization's and customers' data at risk. "The provision of banking services increasingly resembles global manufacturing supply chains, with their efficiencies, complexities and vulnerabilities... The threat surface for disruptions expands, and as authorities in other jurisdictions begin implementing their rules to ensure operational resilience, we are assessing and working with our interagency peers to develop the right approach here in the U.S." When customers trust us to be their financial services provider, it becomes our responsibility to ensure that their finances and data are safe with us—and with our vendors. #Cybersecurity #CommunityBanks #DigitalBanking #OwnersBank #LibertyBank

5

Skiptism runs supreme. Regulators have drummed for simplification of banks. This is clarion call seems to be cast aside by bank CEOs. Cap1 expects regulators to come down on Cap1's assertion that the deal improves competition. Ignoring the current regulatory concerns of unsafe and unsound business practices, rooted in banks cutting corners to save costs and settlings for passing compliance grades. Taxpayer bailouts are not in the offing, especially for cutrate business practice choices. Executives will have to emerge into C-Suites skilled at growing their business without M&A options. Perhaps this means burning the ol' playbook of cutting costs when earnings plans are missed. Finding a new tactic, perhaps restructuring executive compensation could be a new dawning. #banks #mergersandacquisitions #regulatoryactions

1

CFPB launches process to recognize open banking standards The Consumer Financial Protection Bureau (CFPB) has issued a rule outlining the qualifications for industry standard setting bodies to comply with the Personal Financial Data Rights Rule, including a step-by-step guide for application and evaluation. The CFPB is promoting open banking in the US by implementing new personal financial data rights. These rights, passed in 2010, will benefit smaller financial institutions and startups. The CFPB had proposed a rule in October 2023 to implement these rights, which will be finalized in the coming months. Read more at 👇 https://okt.to/mWCK9g #Banking #OpenBanking #technology #digitalization #Digital #Fintech

6

"Unlocking the Power of Three Lines of Defense in Community Banking! 💼🛡️ Community banks face unique compliance challenges. Discover why implementing the Three Lines of Defense model is crucial for robust risk management and regulatory compliance. Learn more at https://buff.ly/3Vfr14i

2

Banking veterans can probably speculate the motives that drove community banks to partner with fintechs who were all too eager to sign up with them. But neither camp had hired expertise to manage the regulatory risk exposure the bank would face in their next compliance audit. The operating profile of community banks is to avoid adding costs since their relationship strategy tends to shy from charging clients service fees to offset costs incurred for attracting and servicing clients. Community banks unfortunately realize that usually the fine imposed on them for noncompliance wipes out years of loan interest revenue, leaving them with unprofitable client relationships and worse yet a crippled balance sheet. In addition, they are slapped with limitations to their business plans, which further degrades their ability to bounce back and recover from financial impacts of the fine. Time for due diligence to size the risk will run counter intuitive to relationship manager(s) cries for urgency in the name of client first (hit/exceed RM's bonus target) mindsets. Perhaps the fined banks mentioned in this report have rejiggered their mindsets for third party partnerships. Maybe next time someone in those banks will say, let's call in a consultant to provide us perspectives on risks, compliance, best practices, etc. Just maybe... #communitybanks #banks #riskmanagement #thirdpartyrisks #regulatoractions #noncompliance

1

1 Comment

This past February the US Treasury's Financial Crimes Enforcement Network (FinCEN) issued a proposal of new rulemaking that could significantly reshape Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) obligations for Registered Investment Advisers (RIAs) and similar entities. Key points include: 1️⃣ RIAs will be defined as 'Financial Institutions'. 2️⃣ No customer due diligence requirements. 3️⃣ Added expense for RIAs, but who pays? This article explores potential impacts on advisors and institutions, providing guidance for adapting to these changes and preparing in advance. 👉 https://okt.to/nVKjTu #fintech #AML #compliance #financialservices

5

Attend any #banking conference or scroll your LinkedIn feed in the financial space, and you're likely to find (especially given recent events), ongoing dialogue about the complexity of bank-fintech partnerships. Within the industry, the conversation is much more likely to bubble up about the things that go wrong over those that go right. In catching a recent Bank Director article about compliance struggles in these relationships, it got me thinking - what if we talked about we're doing to try to get things right more often, and created more space to collaborate together as a #fintech community? Sharing the article below and borrowing from a few of the themes, here's some specifics in greater detail about what we do at Nymbus as a fintech trying to make fintech compliance easier for our banking partners, and we'd love to collaborate on how we can all do so better: 📰 Clear-cut brand guidelines of what you expect your partners to do when they're representing your bank. ✅ At Nymbus, we have our own internal marketing compliance playbook that is used by our Labs team when creating content for our partners. Before a client gets any Nymbus-created content, our in-house compliance team reviews all marketing content for compliance with consumer regulations. This review isn't intended to replace the needed work of our client's compliance teams, but to make it much easier. 🗒 Banks' third-party risk management must keep up with the speed and scale of programs and it might be unclear how to share and delegate compliance duties. ✅ We publish a Managed Services Roles & Responsibilities document that outlines what role Nymbus plays in the services offered, and what our #bank or #creditunion partner should expect to provide support and oversight for. We create a partner-specific operating guide to be used as the rule book for our combined teams when bringing a digital brand to life and operating it day-to-day. 🤝 Fintech investment in #compliance capabilities to be better partners for banks, instead of focusing solely on #sales, #marketing, and customer acquisition. ✅ Our #risk and #compliance team of 10 comes from a background working within financial institutions ourselves, as well as for #advisory and #audit firms and as former regulators. Our compliance team is engaged from pre-sales to implementation and ongoing support, and we pride ourselves on providing direct access to our banking partners to our compliance teams. ⚖ Checks and balances (on both sides) ✅ Nymbus' risk management program and CMS was developed based on banking regulatory guidance - including that of the FDIC, OCC, Fed and NCUA, alongside the CFPB. It's inclusive of quality assurance, regulatory change management, internal compliance reviews and risk assessments, and the maintenance of a risk log to address ongoing enhancements and ways to improve our products and services. https://lnkd.in/ecPmiCdU

14

3 Comments

The The Wall Street Journal recently ran a great article about the increasing aversion from merchants to cash payments and the rise of “reverse atms” and providers like PayNearMe to address the desire to push cash from registers and bill payment. This trend uncorks a whole lot of policy debate given that cash usage is negatively correlated with income and a bastion of the underbanked. Here’s my take: I do NOT want a cashless society but in a free market I think it’s okay for merchants to design their payment preferences and charge commercially reasonable fees for the friction cash presents in operations. It’s a slippery slope to the privacy of cash going away so I would like to see a “Maginot Line” from that perspective. Tony DeSanctis , Ron Shevlin , Anne Arvia and Brandi Gregory - what do you think makes sense here? #payments #cashlesssociety #smarterbank

35

6 Comments

T + 1 starts today

3