Page 19 - Membership Guide

The Compliance Alliance Model

By Scott Daugherty

When you start a conversation about compliance within a financial institution, the mindset automatically
turns to consumer compliance: those regulations that are issued to protect the rights of the bank’s
consumer customers. Even when you search for help with compliance on the internet, or start looking for
consultants and auditors for compliance, you will find these services are all geared towards consumer
compliance. With at least one exception—Compliance Alliance.

Our model of compliance assistance goes well beyond the realm of consumer compliance because we
consider all areas of compliance to be in the compliance realm. When you look at our model, you will find
we have products and services that will be of value to each department and likely each person at your
bank.

Compliance involves capital requirements, asset quality, allowance for loan and lease losses (ALLL),
liquidity and all of the other areas regulators assess during the safety and soundness portion of an
examination, including, of course, the typical consumer compliance requirements.

We consider all of these areas to be under the umbrella of compliance because they each have guidance,
regulations, best practice guidelines as well as other regulatory requirements attached to them. Thus,
they are all subject to review to determine if in fact the bank is in compliance with the requirements or
guidance.
Not only do we consider these to be compliance topics—requiring us to assist our bankers in these
areas—we take it even further by providing assistance to directors to ensure they are also well versed
and able to have those “compliance” conversations with the examiners.

The traditional compliance program has been created to ensure technical compliance with regulations
covering specific bank functions. It was not specifically designed to govern compliance in every area and
every aspect of the financial institution.
However, in effect, all laws and regulations mandate compliance requirements. If your bank’s compliance
model hasn’t been updated to ensure all employees and managers are onboard with this type of
compliance culture, now is the time to do that.

The theory that compliance belongs to the compliance officer has been completely dispelled as
regulators review each area of the bank. Everyone in the bank has a part to play in compliance.

While Safety and Soundness Standards continue to have a major role in determining the safety
and security of our financial system, Consumer and Regulatory Compliance has begun to be
viewed as a top priority in keeping the bank in overall strong health.