Banking compliance and the CARES Act
By : Justin Kern
For bank leaders and officers, corporate culture must expand to include a culture of collaborative compliance. This allows each stakeholder throughout the organization to become aware of his or her assigned responsibilities in relation to regulatory compliance. These stakeholders should be actively engaged in minimizing operational and third-party risk.
In an age of work from home as the “new normal,” it is more important than ever to ensure that everyone is on the same page, no matter where they are working from. With less in-person oversight and limited visibility into the operations of other departments, clear guidelines for each employee and team can make the difference between effective and ineffective compliance.
Regulatory technology, or “regtech,” can play a vital role in keeping highly regulated organizations compliant, while constraining costs and alleviating operational strain and inefficiencies. By integrating smart, tech-based solutions and platforms in the lending lifecycle, organizations may be able to enhance compliance through more clearly delineated processes.
- Although borrowers are required to provide payroll estimates when borrowing through the CARES Act, according to the Treasury Department, lenders are expected to make a good-faith effort to substantiate their calculations and work with borrowers to remedy errors. Regtech can assist with due diligence and reduce risk for lenders while staying in compliance with CARES Act requirements.
- As CARES Act repayment requirements continue to develop at the federal level, regtech can oversee regulatory developments and ensure that stakeholders both within the institution and in the borrowing community are kept abreast of the latest changes and processes.
- Compliance often requires a cross-functional, interdepartmental approach, so a tool with dynamic workflows may enable institutions to delegate queries to relevant team members, and stay on top of outstanding requirements. The result? A culture of risk management that embraces accountability.
- In order to better protect the institution moving forward, regtech can assist with data collection for both board reviews and audits. This may allow for a demonstration of proper oversight and institutional processes for everyone from governmental regulators to internal teams and in-house counsel.
The CARES Act is a landmark effort to counter the devastating economic impact of the worldwide COVID-19 pandemic. In a time of fear and uncertainty, it is more important than ever for lenders to exercise caution and good judgment. With the help of regtech, lenders can feel more confident in their people and processes.
Compliance processes and platforms are no good if they’re not used. For banks, credit unions, and fintech platforms, regtech can augment internal processes by adding technical expertise, legal knowledge and operational ease. Taking a proactive approach to risk reduction may better equip financial institutions to pivot and adapt to the increasingly complex regulatory environment.
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