MReport October 2019

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TH E M R EP O RT | 33 SPONSORED CONTENT An Effective Business Strategy Financial institutions must ask some key questions before updating their CMS to keep pace with the changing business environment. By Barbara Boccia G iven the pace of change in the financial services sector, financial institu- tions of all sizes need to recalibrate their Compliance Management System (CMS) framework to ensure that all corporate governance responsibili- ties are being addressed as their institution grows. Compliance professionals must anticipate and combat new risks as issues emerge. They need to feel confi- dent that internal CMS systems are resilient enough to weather new governance priorities while maintaining controls for existing risks. Here are some questions to ask within your financial institution (FI) to see if there are opportunities to update your CMS. And if you decide there are opportunities to update your CMS, you may want to consider engaging a company like Wolters Kluwer to conduct an indepen- dent third-party review of your CMS. How Has My Financial Institution Changed? We often make granular chang- es to the CMS without pausing to reflect on a holistic perspective of our FI. Consider the changes that may have occurred in the past several years at your institution and help realign resources com- mensurate with current areas of higher risk. For example, has your organization made substantial changes to the activities out- sourced to third-party vendors? Such a shift in core activities may mean a differing number of resources dedicated to managing third-party risk. Has the organiza- tion recently undergone a consid- erable amount of growth either organically or through acquisition? It is critical to review policies, procedures, training, and report- ing, holistically, to ensure there's active management and coordina- tion of information, documenta- tion, and controls. Is Your CMS Ready for Your Next Regulatory Exam? As your institution grows, reg- ulators will want to know how your CMS has evolved to manage the evolving complexities of regu- lations impacting your business practices. A granular review of your CMS framework will help set the stage for your next regula- tory exam and should include a detailed look at your current poli- cies and procedures, compliance monitoring and corrective actions, reporting on trends and escalation to your Board, change manage- ment procedures, and the overall compliance culture. Here Is a Short Checklist to Help You Evaluate Whether Your CMS is Updated and Current: • If your last exam identified any performance gaps in your CMS, check that you have document- ed your remediation and action plans to address any weaknesses in the CMS. • Update policies and procedures to reflect current activities and practices. Avoid using the names of key personnel within the text, and instead, consider an appendix with current contact information that can be easily updated when there is a change in personnel. • Confirm your Complaint Management Program includes a clear definition of a "complaint," and adequately documents how complaints are tracked for a prompt and adequate response, analyzed for metrics and reported up to the Board with clear trends and critical data easily identified. • Ensure you have a current risk assessment that contains an inventory of relevant controls and update your compliance monitor- ing program in accordance with the highest areas of residual risk. • Validate you have a compre- hensive, third-party vendor management program that includes oversight, monitoring, and reporting components. If your third parties include fin- techs, you may have additional responsibilities, as many fintechs do not have an established inter- nal regulatory framework. • Evaluate how long your institu- tion has provided the same training modules to staff year- after-year. Consider updating or customizing your compliance training to provide meaningful guidance that can deepen the discussions about values and encourage behaviors consistent with the ideals of your FI's culture of compliance. At a time when there are so many competing priorities, having the resources to manage and main- tain all the elements that go into an effective CMS can be a challenge. Now may be a good time to evaluate the specific experience and skillsets needed to support new and evolving strategic objectives. Time to Update Whether your institution is preparing for an exam, partner- ing with a fintech, or adapting to significant organizational changes, it is a good time to engage Wolters Kluwer to conduct a CMS Review. Our consultants understand how regulations impact the way financial institutions do busi- ness and can help evaluate your compliance program, identify gaps, and recommend enhancements needed to achieve and demonstrate compliance. Engage our consultants to review your compliance policies, processes, controls, monitoring, reporting, training, and systems to develop a gap analysis and action- able recommendations to improve the operational efficiency and over- all CMS against the requirements of federal regulators. The Wolters Kluwer CMS Review Wolters Kluwer CMS Review is an independent evaluation of an institution's framework for complying with consumer protec- tion laws and regulations and adhering to internal policies and procedures. A typical consulting engagement focuses on: • Board and management over- sight and leadership • Policies and procedures • Employee training • Internal controls • Monitoring and testing For more information, call 800.261.3111 or visit BARBARA BOCCIA, CRCM, MDA, JD is a Senior Director on Wolters Kluwer's U.S. Advisory Services team, helping financial institutions through the maze of regulatory compliance issues they encounter day-to-day, or for pre- and post-exams, or due to organizational and regulatory change. For questions regarding compliance management systems, fair lending, HMDA, UDAAP, or CRA solutions, she can be reached at

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