How to Stay Compliant: The Ultimate Banking Regulatory Compliance Checklist

bank employee working on banking compliance

Cybersecurity in banking isn’t just a matter of protecting data; it’s a critical component of maintaining trust and staying afloat in a sea of regulations. For banks and related institutions, navigating the tides of regulatory banking compliance is a constant challenge.

The Federal Financial Institutions Examination Council (FFIEC), for instance, not only sets expectations for technology and operations but evaluates banking compliance with those standards. Failure to meet them? Potentially harsh penalties that range from financial hits to damaged reputation.

But where do we start? Business continuity isn’t a one-and-done box-ticking exercise—it’s a culture, a constant and coherent approach to keeping ahead of the curve. From building the initial foundation to continuously checking and training your team, here’s a meticulous guide through the complex maze of financial regulations.

Establishing a Regulatory Foundation

Your enterprise’s commitment to banking compliance starts at the foundation, ensuring that your institution is not only meeting the bare regulatory requirements but is prepared to address any future evolutions in the compliance landscape. Start by:

  • Conducting Risk Assessments: Regular reviews to identify, assess, and prioritize potential risks such as financial risk, data breaches, and fraud.
  • Gaining Buy-In from the Top: Without executive and board-level support, your compliance framework lacks the necessary clout to drive culture change.
  • Developing Comprehensive Policies: Every employee should have a clear set of rules to follow, to ensure your bank is meeting regulation expectations.

General Compliance Reporting

Transparency is not just an ethical value in banking compliance—it’s a legal obligation. Ensure that your reporting practices are rock solid by:

  • Staying Informed of Changing Reporting Standards: What may be compliant today could be outdated tomorrow.
  • Implementing Strong Internal Controls: Processes should be in place to ensure accuracy and completeness of compliance reports. Security information and event management comes into play here—without the right collection and analysis tools, your team is left organizing this information on their own.
  • Embedding a Culture of Compliance Through Disclosure: Regularly share updates and insights with employees to keep transparency front and center.

Safeguard Consumer Data

The data of your clients is the most valuable thing your company has. Will your backups perform like you need them to in case of a disaster? Annual disaster recovery testing will help you test your backups and shore up any weaknesses. Here’s how to guard your data with business continuity in mind:

  • Comprehensive Privacy Policies: Details are crucial—which data is collected, why, how it’s stored, and for how long.
  • Data Security Tools: Antivirus isn’t enough. It doesn’t have the threat detection and analysis power that endpoint detection and response or security information and event management tools would have. Considering how valuable your bank’s data is, you can’t rely solely on antivirus. 
  • Data Security Protocols: Regularly update and test these protocols to ensure they can withstand the most sophisticated attacks.
  • Adherence to Data Compliance Regulations: From industry- to local regulations, banking compliance is non-negotiable.

Anti-Money Laundering and Counter-Terrorism Financing

Borders are no barriers to crime, and financial institutions must be at the vanguard of detecting and deterring it. Here’s how to be an impenetrable wall against illicit money flows:

  • Identity Verification Protocols: Employ robust mechanisms to verify the identities of your clients, helping to thwart the use of your institution for illegal activities.
  • Suspicious Activity Reporting: Establish a clear process for monitoring and reporting suspicious activities that could indicate money laundering or terrorism financing. To be fully compliant, banks are required to write a report on any item that could potentially be a breach or compromise. Employees should know how to report and feel comfortable reporting—if they’re afraid of negative consequences, they won’t come forward with suspicious activity. 
  • Training and Adapting: Money laundering tactics change constantly; so should your institution’s AML and CTF defensives.

Undertaking Internal and External Audits

It’s not enough to implement banking compliance measures. You have to make sure they serve you through comprehensive audits:

  • Regular Internal Audits: A routine assessment by an objective internal team will help identify and correct compliance gaps.
  • Robust External Audits: Engage reputable third-party auditors to ensure a rigorous and unbiased evaluation of your institution’s compliance.
  • Actionable Insights: These audits are not just for checks and balances—the insights gained should inform the continuous improvements of your compliance strategies.

Managing Third-Party Relationships

In a connected world, your partners’ compliance is as much your concern as your own:

  • Due Diligence Procedures: Thoroughly vet potential and current partners to ensure they meet the necessary compliance standards.
  • Contract Stipulations: Make sure compliance requirements are explicitly stated in contracts to hold all parties accountable.
  • Regularly Assess Performance: Keep a finger on the pulse of your partners’ compliance through regular assessments and feedback loops.

Training and Awareness

What good are security cameras and locks if you leave your door wide open? Ensure business continuity by educating employees and users:

  • Continuous Training: Regulatory changes, compliance best practices, and emerging threats necessitate ongoing education for your team.
  • Regular Simulations and Exercises: Like battlefield drills, these will prepare your staff to act swiftly and correctly in the event of a banking compliance issue.
  • Monitoring and Tracking: Use metrics to monitor the effectiveness of your training programs and the overall compliance mindset of your employees.

Implementing the Checklist

It’s all well and good to have a checklist, but the real power lies in its implementation. This is your guide to action:

Assessing Compliance Risks and Requirements

Identify the specific compliance needs of your institution, ensuring that the checklist you’re using is tailored to your unique circumstances.

Developing Policies, Procedures, and Controls

Your policies should be more than words on a page—each must be backed by a procedure and enforceable control mechanism.

Monitoring, Testing, and Auditing

Fulfill the checklist’s promise by implementing a schedule for internal and external monitoring, testing, and auditing.

The Future of Business Continuity

Banking compliance regulations will keep evolving, and with them, the ways in which banks need to operate. As such, business continuity will always be a work in progress, requiring constant vigilance, adaptation, and improvement. Keep your institution ahead of the curve by staying informed, gaining buy-in from top-level leadership, and embedding a culture of compliance throughout every level of your organization.

Simplify Compliance With RESULTS Technology

At RESULTS Technology, we offer comprehensive cybersecurity solutions designed specifically for the banking industry. Our team of experts can help you navigate the ever-changing banking compliance landscape, ensuring that your institution is protected and compliant at all times.

Get in contact with our team of compliance experts today to learn more about our services and how we can help you maintain a strong foundation of regulatory compliance. Let’s work together to safeguard your institution’s future.