7 Key Webinar Takeaways on Overcoming a Consent Order
Our latest fireside chat centered on the complexities of managing consent orders and the essential steps compliance professionals must take. CEO and co-founder Peter Piatetsky was joined by compliance experts Andrew Gazdak, Director, and Chuck Taylor, EVP, Financial Crimes Advisory, respectively, at AML RightSource and Rose-Marie Flisco, Sr. Compliance Manager, at RADD LLC. Together, they covered the key aspects of handling consent orders, effective engagement with regulators to preempt consent orders, and the role of third-party resources.
1. Understand the Timeline and Scope of Consent Orders
When a consent order is issued, it often follows a long period of examination and communication with regulators. Once an institution receives a consent order, it should align its remediation plan with the issues raised in the order and timeline set by the regulator. Maintaining a matrix that tracks all identified issues, actions taken, and supporting documentation is crucial.
2. Proactively Engage Regulators
Maintaining an open and proactive relationship with regulators is vital. Institutions should self-report potential deficiencies and outline their remediation plans. This helps build trust with regulators and can prevent minor issues from escalating into formal enforcement actions. A transparent relationship with regulators is key to navigating consent orders effectively.
3. Leverage External Experts
Many financial institutions may need more internal resources to fully address a consent order. Third-party firms can offer the expertise and manpower needed for large-scale remediation efforts, like conducting lookbacks or enhancing transaction monitoring systems. Choosing third-party vendors with proven experience is essential, as regulators are increasingly scrutinizing these partnerships.
4. Upgrade Compliance Technology Stack
As institutions grow and engage with new technologies, existing compliance systems may need upgrades to manage associated risks. Regularly evaluating and upgrading transaction monitoring systems is crucial to ensure they can handle the complexities of modern banking, particularly in the context of FinTech partnerships.
5. Document Remediation Efforts
Thorough documentation is critical when remediating issues identified in a consent order. With proper documentation, regulators may recognize remediation efforts. Institutions should maintain comprehensive records of all corrective actions and be prepared to demonstrate the effectiveness of these measures over time.
6. Engage Independent, Third-Party Reviewers
Engaging independent third parties to review remediation efforts before the following regulatory examination can help identify remaining gaps or weaknesses. These reviews provide assurance that the institution’s compliance measures are effective, which can help expedite the closure of consent orders.
7. Ensuring Long-Term Compliance
As remediation efforts near completion, it’s vital to prove that changes are sustainable and effective in the long term. Some issues may be scrutinized over several examination cycles before regulators are satisfied. Ongoing monitoring and a robust compliance infrastructure are essential to meeting future regulatory demands.
Conclusion
Navigating consent orders requires a strategic approach that includes proactive communication with regulators, the effective use of third-party resources, and thorough documentation of remediation efforts. By following these best practices, institutions can manage the demands of regulatory enforcement actions and strengthen their overall compliance programs.
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