In case you missed it: The role of compliance in reinforcing correspondent banking relationships

February 9, 2017

​Most small financial institutions would agree that they’re seeing, if not feeling, an impact from the growing trend of de-risking. Earlier this week, Dave Garcia, General Manager – Group Legal and Compliance, at the National Commercial Bank Jamaica Limited (NCB), delivered an educational webinar on strategies small banks can apply to mitigate the impact of de-risking. Dave focused on strategies that can be applied internally to develop compliance programs and reinforce correspondent banking relationships (CBRs). Here’s a summary of the webinar:

Implement a transaction monitoring program

Implementing an effective transaction monitoring program is one strategy NCB took, and it has been highly important to their CBRs. Respondent banks must have a transaction monitoring program that is able to generate alerts and large transactions quickly. It must also be the right technology—one that will work for their own business and can be re-configured as their needs change. Not only should the technology cover areas important to your business, but also any areas that impact correspondent accounts.

Stay on top of trends and methodologies

Looking ahead at emerging trends and methodologies is another valuable strategy. Your compliance team must be able to anticipate new forms of criminal activity and to respond proactively. If you have a service area that is vulnerable to new risk (or it’s simply not a core part of your business) and you have determined it’s not worth the investment of more effort or resources, communicate that decision to your correspondent banks. This will show compliance at work within your organization. It also demonstrates your willingness to make tough decisions on compliance when necessary.

Compare risk appetites

Assess your risk appetite by formally documenting a risk assessment of your business. If you do not have a risk assessment, be sure to fully understand the risk your organization faces based on its business model and strategy. Misalignment of your risk appetite with your correspondent bank increases the chances your relationship could be de-risked! Adding additional resources to fully cover an area considered at-risk is one approach to reducing risk levels. Or, you may alter policy-, fee-, or transaction-based activities.

Train and educate your compliance department

Lastly, ensure you have a properly resourced and knowledgeable compliance department. At NCB, ‘knowledgeable’ goes beyond AML/CFT requirements: it means having a solid understanding of the correspondent bank’s expectations. Dave recommends frequent communication with your correspondent bank to keep them informed of your business activities, which inspires confidence in your compliance program. As well, NCB is very responsive to inquiries from correspondent banks. Employees ensure their answers are clear, thorough, accurate and on time.

You can learn more about measures respondent banks can pursue to reinforce correspondent banking relationships—and the real-world examples applied by NCB applied, which has helped make them one of the largest banks in Jamaica. Watch a full recording of the webinar here.

 

About Anu Sood:

Anu Sood is the Director of Product and Corporate Marketing at CaseWare Analytics and is responsible for the company’s global marketing strategy. Prior to CaseWare Analytics, Anu worked in various roles in the high-tech industry and her accomplishments range from writing software for telephone switches to launching a new global satellite communication service. Anu has extensive experience in strategic marketing, corporate communications, demand generation, content marketing, product management, product marketing and technology development. 

Connect:    Anu Sood 

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