acxell Advisor Newsletter

Welcome to acxell's knowledge base of emerging risk management issues

DOWNLOAD SUMMER 2021

Inside Summer 2021 Issue

COVID-19's impact on your BSA/AML Program

Time to revisit your AML program

The COVID-19 pandemic has impacted anti-money laundering (AML) compliance in many ways. It has increased risks, changed the behavior of bank customers, and accelerated implementation of online account opening and other technologies. This article suggests that in light of these changes, all banks should evaluate their AML programs, starting with a risk assessment. A sidebar looks at the Biden administration’s increased prioritization of compliance with the Anti-Money Laundering Act of 2020.
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Should your bank use third party vendors?

Pros and Cons of asset Concentration

The pros and cons of asset concentration

The purpose of community banks is to serve their particular communities and the industries that fuel those local economies. This can lead to potential risk, including losses, if assets become concentrated in an industry that is struggling. This article points out that there are pros and cons to asset concentration — the key is to understand how to keep the right balance.....Read the full article

Managing risk for online account opening

Has COVID-19 impacted your CRA rating?

Has COVID-19 hurt your Community Reinvestment Act rating?

The COVID-19 pandemic has had a significant impact on community banks and their customers, but one area that is often overlooked is the potential impact on a bank’s Community Reinvestment Act (CRA) rating. This article notes that to mitigate the risk of receiving a poor CRA rating, a bank should identify and document the various factors — both bank-specific and community-specific — that influence its lending ability......Read the full article

BANK Wire - Summer 2021

This brief summary of current developments in community banking discusses LIBOR transition guidance that the Federal Reserve recently issued and notes the reintroduction of the SAFE Banking Act in Congress. It also explains that the federal banking agencies are seeking information about how financial institutions are using artificial intelligence in their activities. Finally, it lists some consumer protection recommendations put out by the CFPB’s Taskforce on Federal Consumer Financial Law.....Read the full article

DOWNLOAD SPRING 2021

Inside Spring 2021 Issue

Tips for Fair Lending Compliance

5 tips for fair lending compliance

Community banks need to develop and follow fair lending practices. This article summarizes some of the important provisions of the main laws that govern fair lending, such as the Fair Housing Act and the Equal Credit Opportunity Act. It then offers five tips to help a community bank create an effective compliance program, including conducting a risk assessment and developing a written policy. A sidebar explains that a useful source of guidance on fair lending compliance is the Interagency Fair Lending Examination Procedures used by federal financial agencies.
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Managing the emerging risks of use of 3rd party vendors

Should your bank use third party vendors?

In the uncertain economy resulting from the COVID-19 pandemic, community banks continue to streamline operations, improve efficiency and eliminate waste. This article points out that to help in this process, banks are increasingly turning to outside vendors to provide specialized services beyond the usual offerings. It also explains that to use third-party vendors successfully, it’s important for banks to evaluate liability and assess risk.....Read the full article

Managing the risks of online account opening

Online account opening: Managing the risk

Banking customers increasingly rely on electronic banking tools to open accounts, make deposits, transfer funds and otherwise manage their money — and the COVID-19 pandemic has accelerated this trend. This article points out that all of these activities increase an institution’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance risks, particularly the opening of online accounts.....Read the full article

BANK Wire - Spring 2021

This summary of recent developments in banking discusses some bank-specific relief provided by the Consolidated Appropriations Act (CAA). It also highlights several other CAA-related developments relevant to banks, including the SBA’s guidance for Paycheck Protection Program (PPP) loans and the CAA’s simplification of the PPP-related loan forgiveness application. In addition, it notes the recent announcement that the Federal Reserve Board intends to work with other banking agencies to develop a fintech vendor due diligence guide for community banks.
....Read the full article

Inside Winter 2021 Issue

Accounting for Loan Modifications During COVID-19

Lending in the age of COVID-19

Lending in the age of COVID-19: Accounting for loan modifications

Loan modifications during the COVID-19 era create accounting challenges for banks, which must determine whether a particular modification constitutes a troubled debt restructuring (TDR). This article discusses the ins and outs of how a TDR is triggered and explains how the CARES Act provides temporary relief from the TDR accounting rules. It notes that, to enjoy that accounting relief, banks need to show that concessions were made as a result of the pandemic’s impact and not on account of financial difficulties caused by other factors....Read the full article

Boost non-interest income for a healthier bottom line

In a difficult economy, community banks need to look beyond interest income and seek revenue streams that can help them maintain profitability. Bank managers need to evaluate potential non-interest income sources and determine which will be most likely to help shore up their bottom line going forward. This article offers some strategies to consider, including looking into overdraft and non-sufficient funds charges and revisiting waivers and collections....Read the full article

Need for Banks to Increase More On-Line Presence

What does COVID-19 mean for bank branches?

What does the pandemic mean for bank branches?

Many experts predict that much, or even most, of the prepandemic foot traffic at bank branches will remain online even after we return to “normal.” This means that the role of the branch will need to adapt to an increasingly digital model. This article explains that community banks need to focus on building or expanding their online presence while at the same time creating in-person customer experiences at their branches that can’t be duplicated elsewhere....Read the full article

BANKWire - Winter 2021

This brief summary of recent events in community banking explains an interim rule from the FDIC that temporarily suspends specific requirements of the Federal Deposit Insurance Corporation Improvement Act of 1991 for banks that experienced significant asset growth in 2020. It also notes that banks need to prepare for the upcoming transition away from LIBOR, and points out that the Small Business Administration recently released a simpler application designed to streamline the forgiveness process for some PPP loans....Read more

Inside Fall 2020 Issue

COVID-19 impact on internal controls

Now is the time to review your Internal Controls

The COVID-19 pandemic has had a dramatic impact on the way banks and other organizations do business. Some banks have closed branches — and many are operating with reduced staff or relying more heavily on remote workers. These conditions create internal control challenges. This article suggests that it’s a good idea for banks to review their internal control policies and procedures and consider strategies for making them more efficient and effective...Read the full article

Cybersecurity tips for remote workers

Remote work has become a way of life for many banks and other businesses. And while it’s a great way
to keep workers productive in the current environment, it also introduces new vulnerabilities to hacking and other cybercrime. Here are several tips for making remote work as safe as possible...Read the full article

Balancing risk vs. reward n asset concentration

Hedge your bets
Balance vs. reward in asset concentrations

A community’s economy is often based on just one or two industries, with a smattering of others in the mix. But primarily lending to just one industry, whether it’s to farmers, manufacturers or any other group, can throw a community bank’s loans out of whack and make it tough to recover if that industry takes a hit. This article discusses how community banks can balance risk and reward as they provide lending services to local industries...Read the full article

Bank Regulators Shift to Off Site Examinations for Banks

Are off-site examinations here to stay?

During the COVID-19 pandemic, many banking regulators have shifted to an off-site, or remote, examination process. Many people believe that off-site examinations — with their obvious efficiencies and other benefits — will become standard operating procedure in the future. This article explains the Federal Reserve’s position on use of off-site examinations under unique circumstances and looks at some key factors in how examiners determine whether they’re appropriate, including a bank’s risk profile and management preferences...Read the full article

BANKWire - Fall 2020

This summary of recent developments in banking discusses several significant revisions to the FFIEC’s Bank Secrecy Act/ Anti-Money Laundering Examination Manual. It also notes that the OCC has proposed an update to its regulations that permits banks to hold in-person meetings, and that in June the OCC released its Spring 2020 Semiannual Risk Perspective, reporting key issues facing the federal banking system. In addition, the article points out that the FFIEC recently provided cloud computing guidance.