The following is Part 2 of a 3-part article that examines the benefits of social media along with the risk and compliance issues inherent in this exploding networking opportunity.

Elements and Impacts of Compliance & Risk
Last quarter we introduced four overarching elements of social media that translate into concerns for financial institution executives. Those concerns and comments include the following:

“We can’t possibly have a Facebook page,” said one bank executive to another.

“Think about the reputation risk if someone intentionally posted something of an illegal or harassing nature on the site, and it was forwarded a thousand times before we were able to remove it. Or even if someone didn’t intentionally post something ‘bad’, but instead innocently posted something extremely negative about us based on incorrect information they’d received? We all know you cannot un-ring a bell.”

“I heard that social media sites are often used to launch phishing attacks to get customers to click links that lead to malware,” said a network security officer.

“How do we protect our customers and our infrastructure from that?”...

Is your financial institution close to $274 million in total assets? If so, you should start planning for the transition from small bank to intermediate small bank (ISB) for CRA. For 2010, an intermediate small bank has greater than $274 million in total assets as of the end of the prior two years. This means that your CRA performance will be evaluated based on the small bank lending test and the community development test. Keep in mind that there is no lag period for the transition. As soon as the institution reaches this threshold, you would be evaluated as an ISB that year if the bank receives a CRA exam.

It has been our experience that the key to success for a small bank transitioning to an ISB is developing a community development action plan. The bank should start planning early enough so there would be measurable results for the first year the bank exceeds the ISB threshold. The plan should include three phases – 1) determining community needs, 2) reviewing the bank’s current community development activities and resources, and 3) establishing annual goals for community development activities.

Determining Community Needs In order to determine the community credit needs, you can...

Over the last decade, the industry continues to witness an evolution of customer due diligence process, which driven by global political and economic changes, is getting more complex and rigorous. In response to increased regulatory requirements, the global financial community is establishing new and enhanced processes, methods and procedures to perform customer identity verification, screening and background checking. The customer due diligence process has also been affected by rapid advances in technology, transaction monitoring, risk assessments and scrutiny of business counterparts. One of the most complex and grey areas of the AML activity is undoubtedly identifying and verifying beneficial owners as part of the customer screening process and incorporating this information into on-going transaction monitoring.

Increased money laundering risks can be linked to...

ICS Compliance Promotions

We would like to extend congratulations to our recent promotions for a job well done:

Sharon Blanchette, Assistant Director, New England

Bryan Green, Assistant Director, Florida

Mike Hallock, Assistant Director, New York

Cindy Matthews,Assistant Director, Carolinas

Christine Rahn, Senior Compliance Manager

Paula Witt, Senior Compliance Manager

Bob Farmer, Senior Manager, Technology Compliance

Tony Dandola, Senior Research Manager

Christian Maier, Compliance Manager

Compliance Solutions is a quarterly newsletter published by ICS Compliance.

As compliance specialists, ICS Compliance focuses only on regulatory issues for
financial institutions. Our seasoned professionals, with previous experience as Compliance Officers and/or Federal Regulatory Examiners, provide clients with
invaluable expertise and insight. This competency, along with our tailored approach and strong regulatory awareness, provides financial institutions with the confidence that comes from hiring experts in compliance. Serving institutions nationally from 17 offices, we provide customized compliance services, remediation assistance, and consultation.

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