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Best Practices

Staying On Top of Vendor Risk Management News: Week of December 17

Dec 21, 2018 by Branan Cooper

This was another busy week for vendor risk management in the news! This week there was regulators being told to play nice, UDAP actions, AML actions, BCFP returning to its acronym of CFPB, OFAC compliance commitments, the House released a report on the Equifax data breach and the fallout of the latest Facebook breach. Read more for details on each below. 

Industry News for the Week of December 17

Ballard Spahr on the OCC fintech charter: Read here

Watching add-on products: Read here

Bank examiners asked to adopt less-aggressive tone

The Wall Street Journal reports that two Trump administration officials are touring the U.S. in the hope that regulators can reshape their relationship with banks. The Federal Reserve’s Randal Quarles and the Federal Deposit Insurance Corporation’s Jelena McWilliams have been talking to bank examiners in regional offices and asking them to adopt a less aggressive tone when highlighting risky practices and pressing for behavioral change at finance firms. But critics say a more amenable approach to banks by examiners could allow greater latitude to engage in riskier practices. See the full report: Read here

NAFCU: House report on Equifax breach reinforces need for data security standard

"As NAFCU has previously communicated to Congress, there is an urgent need for a national data security standard for entities that collect and store consumers' personal and financial information that are not already subject to the same stringent requirements as depository institutions," wrote NAFCU's Brad Thaler last week to House Speaker Paul Ryan, R-Wis., and Minority Leader Nancy Pelosi, D-Calif.

OFAC Compliance Best Practices

In a speech made at the American Bankers Association/American Bar Association Financial Crimes Enforcement Conference earlier this month, Treasury’s Under Secretary Sigal Mandelker discussed the Office of Foreign Assets Control’s (OFAC) compliance commitments.  OFAC consistently advises financial institutions to use a risk-based approach to sanctions compliance.  While recognizing that U.S. economic sanctions can apply to all types of industries and businesses which doesn’t easily allow for a “one-size-fits-all” sanctions compliance program that can be universally adopted, Mandelker indicated the belief that there are commonalities to a good program.  OFAC has seen what types of best practices that lead to strong and effective compliance programs as well as where entities have fallen short.

Mandelker stated OFAC will outline what makes an effective sanctions compliance program to assist the compliance community in strengthening defenses against sanctions violations.  He highlighted a few of the components of an effective program:

  • Ensure senior management’s commitment to compliance;
  • Conduct frequent risk assessments to identify and mitigate sanctions-specific risks within an institution and its products, services and member customers;
  • Develop and use internal controls, including policies and procedures, to identify, stop, report and maintain records pertaining to activity prohibited by OFAC’s regulations;
  • Test and audit on the specific elements of a sanctions compliance program and across the institution, to identify and correct weaknesses and deficiencies; and 
  • Ensure all relevant personnel, particularly those in high-risk areas or business units, are given tailored training on OFAC obligations and authorities and the institution’s compliance program.

Committing to these compliance components will be an “essential element” in any future settlement agreements between OFAC and sanctions violators.  It is recognized that under a risk-based approach the implementation of these compliance commitments will vary by institution but it is believed they will also ensure awareness of OFAC obligations and the dedication of sufficient time and resources to OFAC compliance.  Mandelker also pointed out such resources have to go far beyond the mere screening of the Specially Designated Nationals and Blocked Persons List (SDN) list.

Debt relief scam hit with enforcement action – definitely falls under deceptive: Read here

JD Supra on the regulators’ concerns over “add-on” products: Read here

NY reaches settlement over mobile app security flaws: Read here

How the other primary regulators, besides the OCC, can help fintechs – hint: no one has applied for a charter yet: Read here

New Facebook breach impacts 6.8 million and may spur additional calls for new privacy laws: Read here

Western Union and MoneyGram take on the fintechs with their own mobile apps: Read here

UBS Financial Services hit with enforcement action over lapses in AML monitoring, by FinCEN, FINRA and the SEC: Read here

Third parties represent the biggest info sec risk: Read here

Credit Unions prepping for regulatory changes in 2019: Read here

Federal Reserve settles with Kentucky bank over FTC Act violations (add-on products): Read here

OCC and CFPB settle with South Dakota bank over Reg E and FTC Act violations: Read here

What’s in a name?: Read here  and here

Square to file another bank charter – with the FDIC (not the OCC fintech charter): Read here

There was a dramatic increase in cyber risks this year. Download our infographic  to protect yourself.


Branan Cooper

Written by Branan Cooper

Branan Cooper is the Chief Risk Officer at Venminder. Branan has nearly 30 years of experience in the financial services industry with a focus on the management of operational and regulatory processes and controls—most notably in the area of third party risk and operational compliance. Branan leads the Venminder delivery team as the third party risk management subject matter expert in residence. Branan also serves as an industry thought leader. He's a member of InfraGard and the Professional Risk Management Industry Association (PRMIA). And, he was selected in 2018 as an advisor to the Center for Financial Professionals (CEFPro) and board member for the Global Sourcing Resource Network (GSRN).

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