Short, engaging headline

Transcription

1 Short, engaging headline Compliance and elder financial protection Short description Sectors and themes Date 20XX Select the right professional services firm one with the industry depth, knowledge, and insight to help clients address their most pressing issues. kpmg.com kpmg.com

2 Elder financial protection Due to the substantial portion of investment assets held by elders, they are often targets for financial harm. Demographic trends indicate that the U.S. population over age 65 will double by 2030, assuring that the risk of elder financial harm will remain a serious consumer threat. As a result, the consumer protection industry has increased its focus on protecting elders. Therefore, it is increasingly important financial institutions maintain robust procedures and controls to prevent, detect, and respond to threats of financial harm to elder accountholders. Regulatory environment Federal and state financial policymakers are taking action to enhance mechanisms that protect the elderly from financial harm. Regulatory initiatives reflect efforts to heighten awareness through consumer outreach and staff training as well as providing immunity for reporting, in good faith, suspected elder financial harm. Recent actions from the Financial Industry Regulatory Authority (FINRA), the Consumer Financial Protection Bureau (CFPB), and the Financial Crimes Enforcement Network (FinCEN) include: FINRA Proposed New and Amended Rules 2165 and 4512 Authorize placement of a temporary safe harbor hold on an account and notify authorized parties on the account and the trusted contact of the temporary hold in the event of suspected financial harm. Make reasonable effort to collect information on a trusted contact. Require disclosure that the financial institution is authorized to contact the trusted contact. Amend FINRA s account application template to ensure the application captures trusted contact information. CFPB Guidance Train staff to recognize signs of elder financial harm. Use fraud detection technologies to identify suspicious activity and products associated with elder fraud risk. Offer age-friendly services. Report suspicious activity to authorities. FinCEN Issued guidance on elder treatment and financial harm red flags and other indicators Designates elder financial exploitation as a category of suspicious activity Mandatory and voluntary reporting of elder abuse are governed by state laws, rather than federal legislation. CFPB & FinCEN encourages all reporting Gramm-Leach-Bliley Act (GLBA) permits a financial institution to disclose non-public personal information of a customer in order to report financial elder abuse. Federal and state legislatures are also actively working to establish elder financial protections, providing insight into possible future regulatory policy initiatives. Recent legislation includes: North American Securities Administrators Association Model Act to be adopted by states Mandatory requirement to report Report suspected financial harm to state regulators. Notify previously designated third parties. Authorize delaying distributions up to 15 days. Record retention of case facts/actions and compliance. Senior$afe Act pending federal legislation Designed to protect firms that report suspected financial fraud Contingent on staff being trained on elder financial protection and how to identify and stop financial harm of seniors 1 Compliance and elder financial protection

3 Proactive preparation Financial institutions should consider the legal and reputational risks associated with elder financial harm. In addition, institutions should be proactively determining whether its staff are properly trained, monitoring systems are relevant and effective, and appropriate channels are communicated to those responsible for reporting elder financial harm to the authorities. Keeping abreast of regulatory changes and expectations as well as ensuring effective risk management and compliance and Bank Secrecy Act/Anti-Money Laundering programs are in place is critical. More than ever, Boards of directors and senior management need to consider transformation opportunities for their risk management, compliance programs and strategies, and the effectiveness of internal systems for supervising their businesses. Failure to do so can result in severe sanctions, harm to reputations, constraints on business activities, and significant fines and penalties. Financial institutions should prepare for regulatory supervision and examination including, but not limited to, the following areas: Review and assess the Elder Protection written policies and procedures to determine if they address: How to identify, prevent, track, and report potential elder financial harm Red flags for suspicious activity of potential elder harm Reporting instances of elder financial harm (through Suspicious Activity Reports [SARs] or to appropriate federal, state, and/or local authorities) Record retention of case facts/actions and compliance Consider: Conducting a readiness assessment of compliance to evaluate inherent and residual risks associated with elder and disabled person financial harm Reviewing staffing requirements and training materials to determine if consumer compliance and consumer protection issues are adequately addressed, which includes assessing whether training covers appropriate responses to suspicious events and that the training addresses each states own unique reporting laws and requirements Developing case management, investigative due diligence, and escalation protocols for suspicious activity reporting for elder financial harm Evaluating the culture of compliance to assess whether the board of directors and senior management are committed to compliance with regulatory requirements Keeping aware of newsworthy events such as enforcement actions and lawsuits to respond in real time with changes Assess the current use of technology to flag transactions or account activity that may signal elder financial harm. Compliance and elder financial protection 2

4 The KPMG advantage KPMG LLP (KPMG) works with some of the largest and most successful financial services institutions. We have extensive experience and in-depth knowledge of the financial services industry and current and emerging regulatory expectations, which enable us to deliver objective insight on evolving regulatory requirements and expectations. In particular, we have in-depth knowledge of the regulatory requirements and the level of regulatory scrutiny pertaining to elder financial harm, which enables us to: Deliver objective insight on evolving regulatory requirements and expectations on existing and proposed elder financial protection laws Assist with compliance transformation challenges and developing corporate methodology to mitigate regulatory risk KPMG s Financial Risk Management team assists organizations with their efforts to transform their elder financial protection program to better comprehend and manage their regulatory risk by: Improving clarity of potential regulatory supervision and enforcement activities related to elder financial protection Increasing management awareness of supervision and enforcement activities from regulatory agencies with supervisory authority over the financial services industry Assisting with the design, implementation, and monitoring of the enterprise-wide regulatory risks and compliance management program related to elder financial protection Promoting accountability, integrity, and transparency demanded by stakeholders and regulatory agencies Assisting with regulatory transformation initiatives to improve the efficiency and effectiveness of compliance and elder financial protection management programs Working collaboratively with a variety KPMG service lines, KPMG is able to provide perspectives on regulatory expectations, conduct assessments, assist clients with design, and implement compliance management programs to address the current regulatory environment and stay ahead of future changes, highlighted as follows: Enterprise-wide compliance programs Regulatory exam preparedness Identification of trends and developments from regulators and governing bodies Assistance with third-party risk management program development, including testing and site visits Technology program development including data security, theft prevention, and breach response protocols Regulatory change management and governance Internal audit assistance Assess, test, and assist in the development of automated transaction monitoring systems for elder financial program Teaming with KPMG KPMG s dedicated and knowledgeable banking partners and professionals have worked with some of most prominent financial institutions in a wide range of engagements. This vast experience has provided KPMG the capability to offer a variety of services to prepare financial institutions to be adequately prepared for the challenges of elder financial protection. 3 Compliance and elder financial protection

5 Financial services-related KPMG service offerings KPMG utilizes its network of member firms to take advantage of the professional experience with and knowledge of elder financial protection. We are able to leverage these insights to offer a variety of services to prepare financial institutions for the challenges of elder financial protection. Services include: 1 Regulatory compliance 4 Third-party management Assist in the transformation of the elder protection programs to meet regulatory expectations Enhance people, process, and technology programmatic enhancements Evaluate compliance accountability integration across the three lines of defense Assess in the development of automated transaction monitoring systems for elder financial program Assist in the development, assessment, and/or enhancement of the elder financial protection program 2 Compliance risk assessment Identify risks associated with elder financial harm, including operational, regulatory, financial, and reputational Evaluate and refine the key risk indicator (KRI) framework risk and control matrices Categorize potential impacts of risks Identify inherent risk levels and related controls Assist in the development and/or review of the compliance risk assessment methodology and conduct risk assessment Assist in the development of the KRI framework Integrate Risks and Controls Self-Assessment into Governance, Risk and Compliance platform, risk reporting, and risk appetite processes 3 Compliance monitoring and testing Identify applicable federal elder protection regulations and state reporting laws and requirements Assist in the development of test scripts Assess compliance monitoring and testing program Review and enhance key risk and performance indicators Assist in the development and execution of transaction and control-based test plans and procedures Perform compliance testing across the three lines of defense Assess third-party management programs Enhance alignment with regulatory expectations Assist management in improving the third-party risk management program 5 Regulatory exam preparedness Conduct a readiness assessment of compliance with federal and state elder protection regulations Review the compliance management system and its related components Review staffing requirements and training materials to determine it covers the warning signs of elder financial harm and appropriate responses to suspicious events Evaluate the culture of compliance as it relates to elder financial protection Assist in the development of the compliance road map and plan Assist with transaction monitoring and suspicious activity 6 Regulatory exam response Assist in developing response narrative to regulatory exam findings Evaluate the response and resolution of regulatory findings such as Matters Requiring Attention Establish and implement methodology to foster compliance with enforcement actions or other requirements Assist in remediation efforts 7 Regulatory change management Assist in establishment of enterprise-wide systems to identify new and changed laws, rules, and regulations that relate to elder financial protection Help management track the impact of regulatory changes on the organization, and assist in the prioritization of processes for remediation and response 4 Compliance and elder financial protection Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates.

6 Contact us Carolyn Greathouse Principal National Lead, Consumer Regulatory Advisory T: E: Tracy Whille Principal National Lead, Capital Markets and Investment Management T: E: Paul Fagone Principal Capital Markets, T: E: Stacey Guardino Partner T: E: Todd Semanco Partner T: E: Michael Lamberth Managing Director T: E: Ursula Nigrelli Managing Director T: E: kpmg.com/socialmedia The information contained herein is of a general nature and is not intended to address the circumstance of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. Printed in the U.S.A. NDPPS The KPMG name and logo are registered trademarks or trademarks of KPMG International.