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october 26, 2017

Learning from Enforcement Actions

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Let's say you find out one of your third parties is named in an enforcement action, even if it is unrelated to your institution, what do you do? Learn six necessary steps to take.

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Podcast Transcript

Branan_Cooper_2017_circle.jpgWelcome to today’s Third Party Thursday! My name is Branan Cooper and I’m the Chief Risk Officer here at Venminder.

Today we are going to talk about enforcement actions. In particular, enforcement actions involving a third party. Now, if you're like me and you start the day by reading the news, whether it's in the morning newspaper or some headlines delivered, it's all important. 

When a scenario is played out all too often in my career, let's say you find out one of your third parties is named in an enforcement action, even if it is unrelated to your institution, what do you do?

  1. Read a quick sigh of relief that you learned about and are able to take action, be glad you are not involved or are you potentially at risk still?

  2. Learn as much as you can about what happened, what lead up to it, who knows what and when they knew it. 

  3. It's a good time to check your contract provisions, just in case, to see if they are required to contact you in the event of an issue like this, and maybe that will impact the relationship. Not just an enforcement action but a breach, major change in leadership - all those sort of things should be in your contract notifications as well.

  4. Document the steps you need to take to protect your institution, whether its increased monitoring, meeting with their management team, creating a contract addendum to address any concerns and perhaps even leading up to terminating the relationship.

  5. Look for similar activities by any other third parties that you use for similar purposes.

  6. Make sure you document all of your steps and report to senior management, risk committee and your board. 

And without naming names, I encourage you to look at some of the recent enforcement actions around UDAAP, especially where third parties are involved. I particularly like the UDAAP tracker found on the Payment Law Advisor website. 

There are plenty of great ways to monitor the news, whether it a tool like we use with Argos Risk or google news alerts or just scanning various industry publications. It's important to stay aware and vigilant. You've dodged a bullet, now find a way to stay out of the line of fire. 

Again, I’m Branan and thank you for watching! Don’t forget to subscribe to the Third Party Thursday series.

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