Independent Banker - May 2023 - 23

must be represented in the bank's
CMS to the extent it is applicable to
the bank's size, structure, location,
product and service lines, and
legal capacity.
¡ Correctness: Accuracy to the
requirements of current laws,
regulations and regulatory guidance
is paramount. Maintaining accuracy
tests the bank's ability to discover
and receive all relevant compliance
information on a continuing basis,
vet it sufficiently to determine its
applicability and implement it in a
meaningful manner.
¡ Completeness: " Well begun is
half done. " Creating a system of
compliance management oversight
is only the start. The sufficiency
of all compliance functions must
be carefully monitored to ensure
continued application over time.
¡ Comprehensiveness: To
implement an effective CMS,
a bank must ensure policies,
procedures, banking rules, laws
and regulations are applied across
the enterprise. Each branch, each
department, and each staff member
and manager must be included in
the administration of the processes
they touch.
¡ Checks and balances: How
can we know the resources
dedicated to compliance are
paying off? Independent audit
coverage of compliance matters
is the fourth component of an
effective compliance management
system. We should also include
periodic management-orchestrated
compliance monitoring and reviews.
Regardless of a financial
institution's size, structure or
complexity, effective day-to-day
monitoring, periodic reviews and
targeted audits create a pyramid
to help the bank ensure a robust
commitment to compliance.
" We must all work together to address
too-big-to-fail and its harmful impact
on consumers, local communities
and our broader economy. "
-BRAD BOLTON, COMMUNITY SPIRIT BANK
Monitoring and reviews should
look for compliance with laws
and regulations but also ensure
the practices of the bank and its
employees, including third-party
partners, maintain consistency with
internal policies and procedures.
The audit function should review
an institution's compliance with
federal consumer financial laws and
adherence to internal policies and
procedures, and be independent of
both the compliance program and
business function management.
Addressing too-big-to-fail
While larger financial institutions
often far outspend community banks
on compliance programs, staffing
and tools that are visible, they are
not necessarily more successful in
managing compliance functions
efficiently and effectively.
In a Dec. 22, 2022, blog post,
Brad Bolton, president and CEO
of Community Spirit Bank and
immediate past ICBA chairman,
points at the failures of " too big to
fail " financial institutions, the lack of
action from the biggest banks to stem
harmful consumer practices, and
the burden imposed on community
banks and the industry as a whole by
their misdeeds.
" With every offense by the nation's
Wall Street firms contributing to the
outsized regulatory burden facing
the nation's Main Street community
banks, policymakers should continue
working to rein in too-big-to-fail
financial institutions, " Bolton wrote.
" We must all work together to address
too-big-to-fail and its harmful impact
on consumers, local communities and
our broader economy. If the problem
is left untreated, our economy will
be at the mercy of the megabanks-
the antithesis of a free-market
economic system. "
The Federal Supervision and
Examination Manual encourages
banks to make compliance part
of the day-to-day responsibilities
of management and employees,
to self-identify issues and to take
corrective action. To fit properly and
be effective, the pieces of the program
must be complimentary and dovetail
without gaps.
Community banks-with their
streamlined structures, relationshipbased
business models, reinvestment
in in their local communities, ability
to act and react nimbly, and ability
to treat compliance as a part of doing
business-can tame the five Cs to
effectuate compliance.
Mary Thorson Wright is a writer
in Virginia.
independentbanker.org // 23
http://www.independentbanker.org
Independent Banker - May 2023

Table of Contents for the Digital Edition of Independent Banker - May 2023
