Introduction

The banking industry is continuously under the watchful eye of the government and the Federal Reserve. The government is in charge of setting restrictions on the banking industry's borrowing limits and the amount of deposits that banks hold in their vaults. These restrictions have a tremendous impact on banking profitability. It is a federal law that banks must stay complaint to banking restrictions.

What is Compliance?

Compliance is the act of adhering to a standard or a regulation. Compliance training is mandatory for all banking employees. This training tutorial will provide every employee with a basic knowledge about the compliance rules and regulations that pertain to their departments.

Compliance Training Objective

This training is intended to provide participants with a step-by-step guide for regulatory management while following existing federal, state and local regulatory laws corresponding to the Banking branch departments.

In this training course you will learn:

What is regulatory compliance and it how it effects Devon Bank.

Knowledge of Devon Bank departmental responsibilities

Penalties for noncompliance and institutional risks.

How to Devon Bank employees avoid government penalties and fines.

Why compliance is important.

Federal Regulations

It is Devon Bank’s responsibility to comply with all federal rules and regulations in every aspect of its business.

All employees are expected to comply with Federal rules and regulations.

FDIC Compliance Guidelines

Compliance examinations are the primary means the FDIC uses to determine whether a financial institutions is meeting its responsibility to comply with the requirements and proscriptions of federal consumer protection laws and regulations.

FDIC Continued

The FDIC conducts three annual reviews to determine whether of not an institution is compliant to Federal regulations. The three supervisory activities are compliance examinations, visitations and investigations.

Who Regulates Devon Bank?

Office of Comptroller of the Currency (OCC)

Federal Reserve Member Banks (FRB)

Federal Deposit Insurance Corporation (FDIC)

Housing and Urban Development (HUD)

Compliance Examinations

Compliance examinations are primarily done to assess the quality of an FDIC- supervised institution's compliance management systemTo implement federal consumer protection statutes and regulationsTo review compliance with relevant laws and regulationsTo initiate effective supervisory action when elements of an institution's compliance management system are deficient or a significant violation of the law is found

Compliance Visitations

Compliance visitations are conducted by the FDIC to review the compliance posture of newly chartered institutions coming under FDIC- supervision, or in the interval between compliance examinations to review an institution's progress on corrective actions.

Institution Awareness

All employees of Devon Bank should follow the rules and regulations when performing job duties.Devon Bank is responsible for promoting awareness for violation of laws and regulations.

Regulatory Compliance

Regulatory compliance is the goal that financial institutions aspire to reach in the efforts to ensure all personnel are complaint with relevant laws and regulations.

At Devon Bank, all employees are required to conduct business in a legal and ethical manner.

Things to Remember

Do not discriminate against a client or employee because of race, gender, religion, national origin, color, age, disability, sexual orientation or preference or veteran statusCommit to the highest standard of business and ethical conduct in all activities while representing Devon BankRespect the rights of othersAvoid conflicts of interest and self dealingBe award of laws, rules, regulations and policies that apply to your jobPromote accuracy and truth in Devon Bank business transactionsMaintain absolute confidentiality regarding client’s recordsReport any perceived wrongdoing to your supervisor of the Devon Bank Compliance DepartmentDo not destroy any records except in accordance to Devon Bank policy

Devon Bank Branch Operations

The Branch Operations goal is to service and provide products to all retail customers. Branch Operation oversee:

Tellers

Customer Service Representatives

Personal Bankers

Bookkeeping/ Accounting

Branch Operation Responsibilities

Operations of individual branches need to be examined, analyzed and evaluated in order to ensure job duties are being performed.

Branch operations other responsibilities are managing branches, ensuring adherence to Devon Bank standards and ensuring policies are being upheld.

Now that you are aware of FDIC compliance guidelines that govern Devon Bank, we will next review responsibilites for the Lending

Department.

Devon Bank Lending Department

Lending has many function within Devon Bank. It is an important branch which allows Devon Bank to serve its customers by providing expertise in their knowledge of lending.

It is vital for every lending assoicate to be knowledgable in lending federal rules and regulations

Next we will review Federal Rules and Regulations for the Devon Bank

Commerical Lending Department

Devon Banks Commerical Lending Department Regulations

American Disabilities Act

The main aim of this disabilities act is to stop any kind of discrimination in employment, transportation, public programs and services, telecommunications services and public accommodation.

Bank Secrecy Act

This act requires financial institutions in the United States to assist United States government agencies to detect and prevent money laundering.

Financial institutions are required to keep records of cash purchases of negotiable instruments and file reports of cash purchases of these negotiable instruments of ten thousand dollars or more.

Patriot Act

The function of the Patriot Act is to deter and punish terrorist acts in the United States and around the world. The Patriot Act prevents, deters and helps prosecute international money laundering and financing of terrorism.

Anti-Money Laundering

Designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low-and moderate-income neighborhoods.

Community Reinvestment Act

Designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low-and moderate-income neighborhoods.

Diversity

Bank employees must understand the challenges that come with diversity such as the aspect of cultures having different standars for communication and different beliefs.

By eliminating sterotypes and embracing diversity, individuals will be able to work through those difference in their workforce and maximixe the productivity of the organization.

Elderly Abuse

Legislation is being passed across the county due to many senior citizen being the victims of financial exploitaion. Should a bank fail to report suspicions of elder financial abuse, they will be held liable.

Regulation B:Equal Credit Opportunity Act (ECOA)

Prohibits creditor practices that discriminate on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to contract) to the fact that all or part of the applicant's income derives from a public assistance program.

ECOA also applies to the fact that the applicant has in good faith ecercised any right under the Consumer Credit Protection Act.

Bank Bribery Act

Amends the federal bank bribery law. Prohibits any employees, officers, directors, agents and attorneys of financial institutions form accepting anything of value for or in connection with any transaction/exchange.

Regulation V: Fair Credit Reporting Act

Promotes accuracy, fairness and privacy of personal information assembled by Credit Reporting Agencies.

Fair Lending Law

Ensures equal objective and non-baised treatment of existing and prospective customers in all credit-related transactions are made.

National Flood Insurance Reform Act

Instructs banks not to increase, extend or renew any designated loan unless the building, mobile home or any personal property.

Securing the loan is covered by flood insurance for the term of the loan for the paricular type of property under the act.

Gramm-Leach-Bliley Act

Requires financial institutions that offer customers financial services or products like financial or investment advice.

Loans or insurance to explain their information sharing practices to their customers as well as to safeguard sensitive data.

Regulation C:Home Mortgage Disclosure Act (HMDA)

This is intended to provide the public with loan data that can be used to help determine whether financial instituions are serving the housing needs of their communities.

This requires certain lenders to collect data from the various types of home buying/ improvement loan application.

Information Security

Bank employees must understand the importance of protecting customer and employee information.

Complying with the laws and regulations that required due diligence, following proper security policies and procedures, as well as reporting potential problems.

Regulation O: Insider Loans

Prohibits abuse of a bank by its own insiders.

Regulation O covers insiders of the institutions correspondents

Requires special reporting and approval procedures for loans and insiders.

Limits lending amounts to insiders.

Reports loans at correspondents.

Federal Reserve Act 23A-Relations with Affiliates

Regulates transactions between a bank and it affiliates. The following transactions are not permitted by banks:

Parent company's overdrawn checking account with bank subsidiary

Payment of organization costs by bank subsidiary

Federal Reserve Act 23B- Restricitons on Transactions with Affiliates

Expands the range of retrictions on transactions with affiliates.

Any transaction by a member bank or its subsidiary with any person shall be deemed to be a transaction with an affiliate of such bank.

Regulation W: Transations between Banks and their Affiliates

Implements sections 23A and 23B of the Federal Reserve Act, which establish certain restrictions on and requirements for transactions between a member bank and its affiliates.

It applies to all fedrally-insured depository instituions and requires that transactions between member banks uphold stipulations.

Regulation U:Securities Credit by Banks

Provides certain requirements applicable to loans that are made for the pupose of enabling the borrower to puchase or carry margin stock.

Requires U-1 form if loan collateralized by stocks, bonds etc. over $100,000.

Physical Security

National Institute for Occupational Safety and Health depicts workplace violence as any physical assault, threatening behavior or verbal abuse occurring in the work setting.

Devon Bank employees should be knowledgeable and maintain awareness in regards to possible work place violence.

Real Estate Lending

Reminds institutions that strong risk management practice and appropriate levels of capital are essential elements of a sound commercial real estate.

Service Members Civil Relief Act

Offers short-term financial and legal relief to military personnel and their dependants, by placing specific requirements on the financial service industy and legal system.

It provides a wide range of protections for individuals entering, called to active duty in the military or deployed service members.

Sexual Harassment

It is necessary for all employees to be knowledgeable in what is and what is not acceptable behavior at Devon Bank.

In order to minimize the banks sexual harassment complaints, all employee should keep a look out for inappropriate conduct/language, speak up to prevent it and report incidents with the HR.

You have just completed the review of Federal Rules and Regulation for the

Devon Bank Commerical Lending Department

Next you will complete the practice activities

Question #1

Which regulation ensures bank employees protect customer and employee information:

a) Bank Secrecy Act

b) Anti-Money Laundering Act

c) Information Security

d) Gramm-Leach-Bliley Act

Question #2

Bank Secrecy Act requires Devon Bank to keep records of funds transferred and

transmitted of….

a) $1,000 and higher

b) $3,000 and higher

c) $5,000 and up

d) $10,000 and more

Question #3

The function of the Patriot Act is to deter and punish terrorist acts in the United States:

a) True

b) False

Congratulations you have completed the Devon Bank Commerical Lending

Compliance Training!