The Added Value of IBS Compliant Solutions

Transcription

1 The Added Value of IBS Compliant Solutions Carl Bahneman, IBS Product Line Manager Karla Booe, Deputy Chief Compliance Officer Peter Dugas, Managing Director, Center of Regulatory Intelligence April 11, 2017

2 The Added Value of IBS Compliant Solutions Introductions The Regulatory Landscape Now Future The FIS Corporate Compliance Process Recent IBS Compliance Projects Other Resources IBS 2

3 The Regulatory Landscape 3

4 FIS Center of Regulatory Intelligence Delivers timely, unique, practical analysis and actionable intelligence Located in Washington D.C. Provides the latest intelligence, thought leadership, and cutting-edge insight into risk, information security, and compliance issues. Single source of comprehensive research and analysis on political, economic, legislative and regulatory actions. Enables management to quickly detect and respond to regulatory, political, and market changes Pennsylvania Ave. Washington, D.C. fisglobal.com/insights/risc 4

5 5 Advanced Regulatory Intelligence Speeches Op-Eds Testimonies White Paper Litigation Congressional Floor Statements Appropriations Law Firms Amendments Legislation Guidance/FAQs/Exam Manuals Cost-Benefit Analysis Exams Staff Analysis GAO Reports Rulemaking State Legislation Speeches Lobbying Enforcement Actions Congressional Hearings Firms Lobbying, LDAs, Reports CRS PACs National Reports News Committees Courts Public Comments Legislative Hotline History Foreign Laws 5

6 Regulatory Road Map 6

7 President Trump Nominees Nominees Department of the Treasury Steve Mnuchin* Department of Justice Jeff Sessions* Department of Commerce Wilbur Ross* Department of Housing & Urban Development Ben Carson* Department of Homeland Security John F. Kelly* S.E.C. Jay Clayton National Economic Council Gary Cohn O.M.B. Mick Mulvaney* *Confirmed 7

8 Executive Order: Core Principles for Regulating the U.S. Financial System Empower Americans to make independent financial decisions and informed choices in the market place, save for retirement, and build individual wealth Prevent taxpayer-funded bailouts Core Principles Foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry Enable American companies to be competitive with foreign firms in domestic and foreign markets Advance American interests in financial regulatory negotiations and meetings Make regulation efficient, effective, and appropriately tailored Restore public accountability within Federal financial regulatory agencies and rationalize the Federal regulatory frameworks 8

9 Dodd-Frank Act Relief House Committee on Financial Services Sec. 1 Provide for election to be a strongly capitalized, well managed financial institution. Sec. 2 End Too Big to Fail and Bank Bailouts. Sec. 3 Empower Americans to achieve financial independence by fundamentally reforming the CFPB and protecting investors. Sec. 4 Demand accountability from financial regulators and devolve power away from Washington. Sec. 5 Demand accountability from Wall Street through enhanced penalties for fraud and deception. Sec. 6 Unleash opportunities for small businesses, innovators, and job creators by facilitating capital formation. Sec. 7 Provide regulatory relief for Main Street and community financial institutions. 9

10 Congressional Review Act (CRA) Timeline for Congressional Action th Congress Convened Approximate Congressional Review Deadline for 2016 Midnight Rules Final Rules Within 60- Legislative-Day Window Start of 60-day Congressional Review Period Midnight Rule A rule that is passed within the last 60 legislative days of a session of Congress during the final year of a president s term 10

11 Corporate Compliance Process Product and Services Federal Regulatory Compliance

12 Compliance Staffing Fulfilling our mission requires that we foster a culture of high ethical and moral standards by establishing effective governance and oversight, policies and procedures, risk assessment, testing, training and reporting. We accomplish this through a staff of over 50 full-time Compliance associates located across the globe. The Chief Compliance and Customer Advocacy Officer leads nine distinct functional areas with a leadership team that averages over 15 years of compliance experience. Certifications/Degrees on the Compliance team include: Certified Anti-Money Laundering Specialist (ACAMS) Certified Information Privacy Manager (CIPM) Certified Regulatory Compliance Manager (CRCM) Certified Information Privacy Professional (CIPP) Master of Business Administration (MBA) Juris Doctorate (JD) 12

13 Compliance Organization By Functional Area Risk Committee Chief Risk Office Audit Committee Chief Compliance Office Enterprise Product Compliance Model Risk Management International, Institutional & Wholesale BSA/AML Enterprise Program Anti-Bribery, Corruption, Fraud Consumer Privacy Office Export & Sanctions Compliance 13

14 Policy & Procedures Risk Assessments Regulation Management Monitoring Testing Training Reporting Compliance Program Framework Compliance Governance & Oversight Governed by the Executive Risk Management Committee and Board of Directors Reinforced by key program pillars Experience Corporate Compliance Program Expertise The Corporate Compliance Playbook serves as the program s foundation 14

15 Corporate Compliance Process Program Pillars

16 Compliance Policies Corporate Compliance owns and governs compliance for the following policies and standards: Policies & Standards Code of Business Conduct and Ethics Anti-Bribery and Anti-Corruption Anti-Money Laundering Fair Credit Reporting Act (FCRA) Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) Fair Debt Collection Practices (FDCPA) Identity Theft Red Flags Export Control and Economic Sanctions Compliance Policy Country Risk 16

17 Risk Assessments The Corporate Compliance group performs compliance risk assessments for all FIS products. High risk products - assessed annually Moderate risk products - assessed every other year Low to no risk products - assessed every three years As new features or functionalities are added to a product a review will occur to determine if the frequency needs to change. The risk assessment process includes an evaluation of the controls in place measured against the inherent risk of the product or service, as depicted in the chart below: Control Environment Inherent Risk Strong Satisfactory Needs Improvement Weak High Low Moderate High High Moderate Low Low Moderate High Low Low Low Moderate Moderate 17

18 Regulation Management - Inventory Compliance monitors United States and international agencies on a daily basis and maintains an enterprise-wide regulation inventory for our products and services. Examples include: Federal Agencies Federal Banking Agencies (FBA) Federal Reserve Board (FRB) Office of the Comptroller of the Currency (OCC) Consumer Financial Protection Bureau (CFPB) National Credit Union Administration (NCUA) Federal Deposit Insurance Corporation (FDIC) Federal Trade Commission (FTC) Internal Revenue Service (IRS) Office of Foreign Asset Control (OFAC) Financial Industry Regulatory Authority (FINRA) International Financial Conduct Authority Monetary Authority of Singapore 18

19 Regulation Management Change Control Regulatory implementation plans and change control follow a repeatable process enhanced by a integrated, multi-disciplinary compliance management system. Regulatory Change Inputs Logging & Tracking Tool Impact Analysis LOB Assessment Control Plans & Monitoring 19

20 Monitoring Regulatory updates, risk assessments, and control plans are continuously monitored and evaluated to ensure accountability and compliance. Effective communication is achieved by engaging key stakeholders through a variety of channels and tools. Monthly newsletter distribution list Project Meetings & User Group Forums Monthly status group Audit support 20

21 Compliance Testing Pre-Planning (No Impact to LOB) Project Scope Identify high risk regulatory requirements Identify Compliance Stakeholders Draft test scripts Planning Conduct walk-through with Compliance Stakeholders Verify self-reported items Completion of Archer test scripts Fieldwork (Testing) Control testing Conduct weekly meetings Evidence review and analysis Wrap Up & Reporting Results communicated to business Issue remediation State of Compliance report 21

22 Compliance Training The Enterprise Compliance Training program outlines the required curriculum to educate resources on compliance requirements that affect FIS products and services. The program addresses resources not only in the development organization, but also in support and quality assurance, including specialty products and services. In addition the program introduces new employees to the regulatory requirements of the product they will support, refresher training to keep employees regulatory aware. Training Types New Employee Training Refresher Training Supplement Training Job-Specific Training Specialty Products & Services Enterprise-Wide Training The program also outlines the training requirements for Corporate Compliance so that members of the compliance team maintain the required knowledge of current laws and regulations. 22

23 Compliance Training (continued) Employees assigned to the regulatory teams receive additional training on an ongoing basis as new or amended regulations are issued by the regulatory agencies. Corporate Compliance monitors for training offerings and alerts the Lines of Business of the availability of these opportunities. Annual mandatory training for all employees includes: o o o o Regulatory Compliance (including AML) Anti-Bribery/Corruption/Retaliation Privacy Code of Business Conduct and Ethics All Enterprise Training is tracked as a KRI. Failure to complete the training will result in either or all of the following: ineligibility for a raise, impact to incentive or termination. Additionally, the Chief Compliance and Customer Advocacy Officer provides annual compliance training for the Audit Committee to the Board of Directors. 23

24 Compliance Reporting Corporate Compliance reports to senior management, the Executive Risk Management Committee, and the Audit Committee to the Board of Directors at least quarterly to provide the state of compliance as it pertains to: Compliance issues, root cause, and remediation Risk assessment and testing results State of privacy processes Anti-Bribery, Corruption, and Country Risk Conflicts of Interest Gifts and Entertainment 24

25 Recent IBS Value-Add Compliance Enhancements

26 Making IBS Compliant Including Corporate Compliance throughout the project A Development team filled with Subject Matter Experts A solid repeatable Software Development Life Cycle process Compliance projects that drive automation and efficiency Flexible compliance solutions to support clients needs Clients willing to assist and be engaged Value add, not just the minimum 26

27 Metro 2 Credit Bureau Reporting Regulation FACT Act The FACT Act, which stands for Fair and Accurate Credit Transactions Act, was signed into law in 2003 Regulation requires accurate credit reporting if the bank chooses to report Data submission to major credit reporting agencies managed through the CDIA and reported in the Metro 2 format Overview of changes Full review of Metro 2 Guidelines to support preferred approach Support for full payment history profile Updated calculation of key fields More robust support for bankruptcy reporting New Credit Bureau reporting page in IBS Insight with separate entitlement Additional defaults and automation for closed/paid loan processing More robust reporting through the R7209 and BIC data 27

28 Metro 2 Credit Bureau Reporting Value Add Greater accuracy of reporting Reduced reliance on E-Oscar tool Great automation Increased flexibility Full data to answer client and auditor questions more easily Automated stopping reporting on paid loans 28

29 CFPB Mortgage Servicing Periodic Statement Changes Regulation One of the initial areas of focus of the Consumer Financial Protection Bureau, consisted of a number of changes to existing regulations intended to inform and protect consumers as it related to mortgage servicing. The largest area of impact consisted enhancement to the loan system periodic statement. Overview of Changes Redesign of R6090 to address the required changes in content and layout Additional late fee and misc. fee information Additional unapplied funds detail Running totals on funds paid during the year broken out by the various payment components Additional transaction detail Enhanced delinquency information including current status and breakdown of all outstanding amounts past due Value Add New statement can be used for CFPB and not CFPB banks Ability to mask account numbers related to autopayments and ACH Flexibility to allow banks to customize messages Reduce postage by including delinquency info along with the statement 29

30 Flood Zone Tracking Regulation The National Flood Insurance Program is responsible for communicating the requirements that FEMA expects as it related to tracking and monitoring properties and loans that reside within a flood zone. These enhancements were not a response to any specific regulatory change but instead an opportunity to enhance support for these requirements based on Compliance User Group feedback. Overview of changes Designed a new IBS Insight page that mirrored the FEMA Flood Determination form Ability to support tracking of multiple properties Enhanced to link each form to a multiple collateral and/or escrow record New data added to BIC Value Add The entire project was a value add to help banks track and monitor those loans that were in a flood zone in the system of record 30

31 Loan Modifications Regulation Home Affordable Modification Program In 2009, in response to the sub-prime mortgage crisis, the Home Affordable Modification Program (HAMP) was designed to help financially struggling homeowners avoid foreclosure by modifying loans to a level that was affordable for borrowers and sustainable over the long term. This was done by interest rate reduction, fixing the interest rate, principal reduction or forbearance, and term extension. The program provides clear and consistent loan modification guidelines and includes incentives for borrowers, servicers and investors. Overview of changes Created a new IBS Loan Modification page in IBS insight to track and monitor the necessary data related to the modification Created 4 new BIC reports to support the investor (FHLMC and FNMA) requirements Value Add Can be used to track any type of modification, extension or renewal Stores historical information if multiple different modifications have taken place 31

32 Same Day ACH Regulation NACHA Same Day Rule Change was approved with implementation to occur in three phases: Phase 1 (credits) effective - 9/23/16 Phase 2 (debits) effective - 9/15/17 Phase 3 (timing) effective - 3/16/18 All banks are required to accept and post Same Day payments. However, originating Same Day transactions is not mandatory. Overview of Changes A cross application team of Product Managers met to define implications to all IBS products. A whitepaper was created IBS Response to Same Day ACH and posted on the client portal. Many changes were implemented across FIS and IBS to support Phase 1 and other changes are underway for Phase 2 32

33 Same Day ACH Value Add Capitalizing on the Same Day Returns Window (planned for 4Q) With the NACHA Same Day Rule Change, a new FED window will be available for returns. IBS banks will want to return ACH debits quicker using this new returns window to compete effectively with the large banks that are moving in this direction. The sooner these debits are returned, the sooner your bank will receive credit for them. This project will create a new End of Day Function in IBS Exceptions Processing that will enable banks to submit an end of day for all ACH items that are set to be returned by a specific cut off time to be determined. Once this end of day is submitted, the ACH returns will be sent to ACH so that they can settle at the other banks that day. These transactions will be considered blocked in IBS Exceptions Processing and will no longer be able to be changed. Any ACH transaction not returned in this early window will still be able to be decisioned in IBS Exceptions Processing. After final end of day there may be additional ACH items returned. 33

34 Currency Transaction Reporting Regulation Comply with the spirit of FinCEN regulations about reporting large currency transactions IF a bank has knowledge of cash activity on accounts with common ownership, but unique TINs. Overview of Changes Created an optional aggregation method Clients establish one parent with multiple child TIN relationships CTR analyzes ALL cash activity for ALL related TINs each business day Client option to create a report or an actual CTR Value Add Increased efficiency by eliminating an almost impossible/time-consuming manual activity Increased efficiency by generating a CTR automatically for bank review/approval Demonstrates compliance with the spirit of FinCEN regulations to examiners 34

35 Other Resources Forums to Discuss Compliance Regional user groups Study/Focus groups Quarterly Compliance User Group Additional IBS Compliance Resources Roadmaps Client Portal Compliance Position Papers The Support Center Bulletins 35

36 Thank You Carl Bahneman, Karla Booe, Peter Dugas,