The American Bankers Association Regulatory Compliance Conference (ABA RCC) came to a close in New Orleans last week and this week nearly 2,000 attendees are returning to their offices to put the pieces together – taking what they learned and determining how it will apply and affect their institutions.  We, at Compliance Resource, are doing the same – reviewing current and emerging issues as well as what’s on the horizon for bank compliance – putting all the pieces together to help us understand where to focus our time and attention to better help you. This article shares some of the most important banking compliance issues discussed at the conference.
A Few (of the Many) Key Points:

  • A remediation and restitution policy is an effective tool for institutions of all sizes;
  • Be mindful of consumer protection throughout digital implementation;
  • Ensure strong data governance (policies of use, standards for quality, and protection of data);
  • Ensure strong management and consistency in conduct risk;
  • Beware of risks in digital marketing such as UDAP/UDAAP, redlining, geo-targeting, and alternative data that may result in fair lending issues;
  • Banking marijuana and CBD businesses require risk/reward analysis and development of strong processes (e.g. risk assessment, business plan, policies and procedures, enhanced due diligence, monitoring, etc.). If you are not banking marijuana businesses define how you are monitoring for such businesses; and
  • Be vigilant in monitoring for legislative and regulatory actions related to mortgage lending as changes continue to roll out.

Legislative Action
There continues to be significant changes occurring in compliance on both the legislative and regulatory sides. Some of the most notable proposed legislation affecting banking compliance includes: 1) the SAFE Banking Act and STATES Act bills which would, respectively, create protections for depository institutions that provide financial services to cannabis-related legitimate businesses and legalize marijuana-related activities at the federal level where they are permitted by state law; 2) Bank Secrecy Act/Anti-Money Laundering reform such as with H.R. 2514, the Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform Act of 2019 (the COUNTER Act) and the Corporate Transparency Act of 2019 that would require corporations to disclose their beneficial owners at the time the company is formed – financial institutions would have access to the information, with the customer’s consent, to aid in complying with the customer due diligence requirements; and 3) Flood NFIP extensions and reforms through H.R.3167 National Flood Insurance Flood Program Reauthorization Act of 2019. Other areas the ABA would like to see reform is with Government Sponsored Enterprises and data security; however, action is not likely in the foreseeable future.
Regulatory Action
 A few areas of regulatory action to be mindful of include: 1) CRA modernization – the federal banking agencies (FRB, FDIC, and OCC) expect to issue a proposed rule by late summer (ABA expects it will be before year end 2019); 2) HMDA proposed rules and notice of proposed rules related to institutional coverage thresholds and request for information related to cost/benefit of new data points; 3) HUD proposed rule related to disparate impact expected July 2019; 4) ATR rulemaking expected by year end 2019; and 5) Additional informal TRID guidance is likely in the near future.
The Future of Bank Compliance
Technology has been a topic of discussion at the ABA RCC for several years; however, the focus on technology at the 2019 conference was undeniably prevalent. Innovation and use of technology, in some form, whether digital marketing; artificial intelligence and robotics to accomplish tasks related to mortgage servicing, underwriting, HMDA LAR testing, know your customer, complaints, regulatory change, etc.; and/or ensuring data strong governance (quality, use, and protection of data) have made their way in to most financial institutions. It was evident that the use of technology is growing at a rapid pace in mid-large financial institutions and the regulators are working through their offices of innovation to foster and embrace innovation available to banks. Even with the rapid pace of growth, due to limited resources community banks have generally not embraced regtech and artificial intelligence as rapidly; however, with the pace of change it is likely in their future. Becoming familiar with the terms and available technology sooner or rather than later is in the entire banking industry’s best interest.
The future of the Consumer Financial Protection Bureau’s actions were addressed by CFPB Director Kathy Kraninger who stated that the CFPB’s mission of protecting consumers is not going away. Director Kraninger noted the goals of the CFPB are education, rulemaking and guidance, supervision, and purposeful enforcement through public decisive action. Such action against wrongdoers sends a clear message. Director Kraninger committed to fair and thorough evaluations and eased concerns of bankers by reassuring RCC attendees that rules should not and will not be implemented through enforcement actions but through a transparent rulemaking process.
These are a few of the “pieces” that make up the emerging image of the regulatory landscape developed over the course of the ABA RCC. We hope readers gain some insight into current hot topics, legislative and regulatory actions, emerging issues, and also what the conference has to offer – invaluable information to guide us into the future of compliance.
We hope to see you at next year’s ABA RCC in National Harbor, Maryland!