Considering the significant risks of non-compliance, credit unions and small financial institutions need to make IT compliance a priority throughout their organizations. IT teams should not be the only ones involved, as other employees can do their part to prevent cybercrime and adhere to regulations, such as proper data storage and reporting security incidents.
However, it’s understandable if organizations get overwhelmed by the breadth of IT-related compliance. To help make compliance more manageable, focus on following these four steps:
#1. Identify Relevant Regulations and Guidelines: Regulations can vary widely based on factors
such as the type of financial institution, its size, location, participation in industry groups and other factors. As such, compliance is not as simple as to say, “Follow X, Y and Z and you're all set.”
Instead, credit unions and small financial institutions should conduct a thorough review of regulations that potentially apply to them. Often, this includes reviewing regulatory documents from government agencies, consulting legal teams and potentially leveraging technology such as compliance software that helps identify relevant regulations.
#2. Audit Existing Compliance-Related Practices: Once you have an idea of which regulations you need to comply with, you can start to analyze areas where you're already in compliance and where you may need to make changes. Conducting an internal audit of your existing processes, documents and data storage sites, possibly with the help of a third-party auditor, you can help you determine any compliance gaps. For example, an audit can cover:
- Whether your IT compliance controls are working as designed and in accordance with relevant rules and frameworks to instill confidence in your IT processes.
- Cybersecurity risk analysis to identify and measure your risk profile, based on relevant assessments such as the Cybersecurity Assessment Tool from the Federal Financial Institutions Examination Council (FFIEC).
- General risk assessments to cover how financial institutions are managing overall compliance risk, particularly as they add new and evolving services.
- ACH annual audits in accordance with National Automated Clearing House Association (NACHA) requirements.
- Interest rate risk independent audits to verify that these calculation models meet business needs and Federal Deposit Insurance Corporation (FDIC) regulatory guidance for interest rate risk management.
- Bank Secrecy Act model validations to ensure the accuracy and effectiveness of model specifications, processes, authorizations, inputs, rules, calculations and output.
- Vendor management to ensure working with third parties does not create additional compliance concerns. For example, the way vendors store data can be tied back to your customers and their privacy.
- Business continuity management, including business continuity plans, should be FFIEC compliant and allow you to still operate in critical areas during foreseeable disasters, such as hurricanes.
- Cybersecurity response strategies with a plan for detection, analysis, containment, eradication, recovery and post-incident reporting that meets the National Institute of Standards and Technology (NIST) standards, along with your specific business needs.
- User access strategies to help ensure that unauthorized employees or other stakeholders do not gain access to data they should not have.
Compliance should be an ongoing activity within credit unions and small financial institutions, so taking steps such as adding compliance staff or using third-party services can help keep compliance activities on track and remain a priority throughout organizationIdentify Relevant Regulations and Guidelines: Regulations can vary widely based on factors such as the type of financial institution, its size, location, participation in industry groups and other factors. As such, compliance is not as simple as to say, “Follow X, Y and Z and you're all set.”
Accelerate Compliance With DataComm
DataComm is a leading managed service provider based in Tampa, Florida, with significant expertise helping financial services firms improve compliance. Our wide range of services includes implementing compliance-related software and processes, auditing compliance procedures, testing security practices and more.
We work with a variety of credit unions, community banks and regional banks to turn compliance challenges into opportunities to innovate. We offer cutting-edge applications and systems that can deliver enhanced end-user experiences for both employees and customers.
To continue the conversation on DataComm's audit and compliance services, contact an expert representative today.