Community Banking Advisor: Is your BSA/AML program up to date?

A bill introduced in Congress would make it easier for the government to hold individual bank officers and directors personally liable for a financial institution’s Bank Secrecy Act / Anti-Money Laundering (BSA/AML) violations. Even if the bill isn’t passed, the trend in recent years has been toward individual accountability.

Consider the recent enforcement action against MoneyGram International. In that case, the Financial Crimes Enforcement Network (FinCEN) notified the firm’s former chief compliance officer that it planned to penalize him as much as $5 million for his role in the firm’s BSA/AML lapses.

In light of these developments, all banks would be wise to conduct a BSA/AML risk assessment and review their compliance programs to be sure they have appropriate policies, procedures and controls in place.

Get ready for new capital rules

Starting in 2015, your bank will be subject to tougher, more complex capital requirements under the Basel III capital framework. As you prepare for the impact of the new requirements for your capital management program, don’t overlook an important opportunity to reduce your capital’s volatility.

Under the new rules, most of a bank’s accumulated other comprehensive income (AOCI) will be included in regulatory capital, including unrealized gains and losses on available-for-sale securities. This requirement increases volatility and makes calculating your bank’s capital much more complex.

Fortunately, banks with less than $250 billion in assets can make a one-time election to permanently opt out of this requirement. The election must be made by March 31, 2015, with your first quarter call report and, if applicable, your FR Y-9C, Consolidated Financial Statements for Bank Holding Companies report.

CFPB provides a snapshot of consumer complaints

In a recent report — Consumer Response: A Snapshot of Complaints Received — the Consumer Financial Protection Bureau (CFPB) summarized nearly 400,000 consumer complaints it handled between July 21, 2011, and June 30, 2014. The largest percentage of complaints (34%) involved mortgages, followed by debt collection (20%), credit cards (14%), bank accounts and services (12%), and credit reporting (12%).

The report also lists the most common complaints in each category. For example, the most common mortgage-related complaints involved problems consumers faced when unable to make payments. They included issues regarding loan modifications, collections and foreclosures. And the most common bank account and service complaints involved matters related to opening, closing or managing accounts, such as account maintenance fees, changes in account terms, confusing marketing, early withdrawal penalties for certificates of deposit and involuntary account closures.

You can find the report at http://www.consumerfinance.gov/reports/consumer-response-a-snapshot-of-complaints-received-2014.