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Compliance Culture: How to Create One in Your Firm

Compliance Culture: How to Create One in Your Firm

Financial institution compliance best practices involve moving beyond a once-a-year push to meet compliance requirements. Instead, financial firms are creating a culture of compliance, where employees at every level have a thorough understanding of the importance of compliance and incorporate it into their day-to-day operations.

The current administration in the U.S. has relaxed some regulations for financial firms. For example, the MOBILE Act removes restrictions and simplifies new customer onboarding. Many regulations remain in place, though, including those from the FFIEC, the FDIC, the NCUA, and other financial industry regulatory bodies. According to the Accenture 2017 Compliance Risk Study, 89 percent of institutions are planning to increase their investments in compliance management.

That’s why creating a culture of compliance is so important. This approach ensures a safe environment for customers and simplifies the auditing process. Firms are creating this culture by changing their approach to employee training, incorporating auditing preparation into their daily routines, and leveraging technology to simplify compliance and increase security.

Reimagining Employee Training

Reimagining Employee Training

Every employee, from tellers and administrative staff to senior leadership, needs to be involved in creating a culture of compliance. To get buy-in from every employee, financial firms are infusing training into the daily life of their firms. Financial institutions are shifting away from periodic to ongoing training that explains the importance of compliance as well as the steps each employee must take to ensure that compliance.

To reinvigorate employee training, leading financial firms consider the following:

  • Training impact: As you plan employee training, what do you want employees to understand and do differently as a result of that training?

  • Relevancy: Is the training relevant to the targeted employee group?

  • Engagement: E-learning simplifies employee training, making it easy to track and implement. Whether you create regulatory training materials in-house or outsource to another firm, look for engagement opportunities for your employees to ensure they understand the contents of the training materials. Entertaining videos, problems to solve, and questions that require thoughtful responses improve employee engagement as well as retention.

  • Accessibility: Many financial firms are creating centralized training portals that put training courses, checklists, forms, brochures, documents, and procedures all in one place. Employees can go to one location to find everything they need and ensure they are following procedures and protocols.

  • Accountability: Measure the results of your training. Are employees referencing the training materials? Are new procedures and protocols being implemented? If not, consider revisiting them along with the reasons behind their implementation.

 All employees should have a clear understanding of their role in regulatory compliance and see it as a central part of the work they do.

Ongoing Audit Preparation

Ongoing Audit Preparation

Another facet of financial institution compliance best practices is taking a proactive approach to audit preparation. Infusing audit preparation into the daily life of your firm underscores the importance of compliance. When employees better understand the auditing process and their role in it, it helps to create a company-wide compliance culture.

 Financial firms are proactively preparing for regulatory audits by:

  • Creating an internal audit team. Periodically conducting internal audits ensures your firm and its employees are ready for external audits. The team may also review previous audits to take steps to prepare for future audits.

  • Conducting walk-throughs. Before an external audit, conduct a walk-through so employees know what to expect and what questions they may be asked.

  • Communicating with employees. Include information on the auditing process in employee training.

  • Consult with a third party. Bringing in a third party to review your auditing practices can shed new light on your firm. They can provide a thorough evaluation of your company’s procedures and make suggestions for improvement.

Given the number of audits financial firms undergo each year, taking a proactive approach can simplify the auditing process and improve auditor communications.

Leveraging Technology

Leveraging Technology

As employees learn their role in your firm’s culture of compliance, it’s important to have checks and balances in place. For example, even diligent employees may make errors when faced with a high number of tedious manual tasks. To ensure a culture of compliance, financial institutions are incorporating technological tools to prevent lapses and enhance security. These tools include:

  • Robotic process automation (RPA): RPA can be used to automate manual tasks such as data collection, risk assessment, and monitoring transactions for potential fraud.

  • Blockchain: Blockchain’s distributed ledger creates a clear audit trail and enhances transparency.

  • Predictive analytics: Predictive analytics tools provide valuable insights into your institution, allowing your firm to better assess risks and make informed decisions. For example, predictive analytics tools can be used to monitor for money laundering activities or to generate customer risk ratings.

  • Machine learning: With machine learning, financial firms can analyze large data sets deeply and accurately, using the results to improve security and overall compliance.

While technology can’t create a culture of compliance on its own, it can provide accountability and valuable insights to inform your firm’s decisions.

Consulting a Trusted Partner

Consulting a Trusted Partner

When it comes to creating a culture of compliance, your firm doesn’t need to go it alone. Many financial institutions turn to trusted partners for audit and compliances services.

At DataComm, we know the importance of creating a culture of compliance. We can perform audits tailored to the needs of your organization, including IT audits, an ACH annual audit, and interest rate risk independent audits. We’re up-to-date on the latest regulatory standards for financial institutions and can help your firm develop policies that meet your unique requirements.

Contact us today to find out how we can help you create a culture of compliance through financial institution compliance best practices.


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