Compliance in Banks: Risk Management and Regulatory Reporting

Study Notes

Identifying, assessing, and mitigating potential risks that could impact the bank's operations, reputation, and financial stability
Types of risks:
- Credit risk
- Market risk
- Liquidity risk
- Operational risk
- Reputation risk
Risk management framework:
- Risk identification and assessment
- Risk measurement and monitoring
- Risk mitigation and control
- Risk reporting and review

Submitting accurate and timely reports to regulatory bodies, such as the Federal Reserve or the Office of the Comptroller of the Currency
Types of reports:
- Call reports
- Thrift Financial Reports
- Bank Holding Company Reports
- Anti-Money Laundering (AML) reports
Regulatory reporting requirements:
- Frequency and deadlines
- Data accuracy and completeness
- Compliance with reporting formats and standards

Ensuring the bank's internal controls and procedures are adequate and effective in managing risks and complying with regulations
Audit functions:
- Internal audit
- External audit
Compliance functions:
- Compliance risk management
- Compliance monitoring and testing
Audit and compliance responsibilities:
- Identifying and addressing control gaps and weaknesses
- Providing assurance on the effectiveness of internal controls

Verifying the identity and background of customers to prevent fraud, money laundering, and terrorist financing
KYC requirements:
- Customer identification and verification
- Customer due diligence
- Ongoing monitoring and reporting
KYC processes:
- Customer onboarding
- Customer profiling and risk assessment
- Transaction monitoring and reporting
KYC benefits:
- Enhanced customer protection
- Reduced risk of fraud and financial crime
- Improved compliance with AML and CFT regulations

Identifying, assessing, and mitigating potential risks that could impact the bank's operations, reputation, and financial stability
Five types of risks: credit risk, market risk, liquidity risk, operational risk, and reputation risk
Risk management framework consists of four components: risk identification and assessment, risk measurement and monitoring, risk mitigation and control, and risk reporting and review

Submitting accurate and timely reports to regulatory bodies, such as the Federal Reserve or the Office of the Comptroller of the Currency
Four types of reports: Call reports, Thrift Financial Reports, Bank Holding Company Reports, and Anti-Money Laundering (AML) reports
Regulatory reporting requirements include frequency and deadlines, data accuracy and completeness, and compliance with reporting formats and standards

Ensuring the bank's internal controls and procedures are adequate and effective in managing risks and complying with regulations
Two types of audit functions: internal audit and external audit
Two types of compliance functions: compliance risk management and compliance monitoring and testing
Audit and compliance responsibilities include identifying and addressing control gaps and weaknesses, and providing assurance on the effectiveness of internal controls

Verifying the identity and background of customers to prevent fraud, money laundering, and terrorist financing
KYC requirements include customer identification and verification, customer due diligence, and ongoing monitoring and reporting
KYC processes involve customer onboarding, customer profiling and risk assessment, and transaction monitoring and reporting
KYC benefits include enhanced customer protection, reduced risk of fraud and financial crime, and improved compliance with AML and CFT regulations