Week of April 24

April 24, 2018

In This Issue…

• Bank exam surveys: we need you now more than ever!
• Bankers visit Oklahoma delegation, urge quick passage of S. 2155
• FAQs on customer due diligence
• 2018 OBA Convention coming in May
• OBA Emerging Leaders joining in happy hour
• 2018 edition of OBA Directory of Banks now available
• OBA education corner …

Bank exam surveys: we need you now more than ever!

As you may remember, the OBA was involved from the outset in creating the “Post-Exam Survey” as a part of the Regulatory Feedback Initiative. With the leadership changes at the federal Regulatory Agencies, the data produced by the Regulatory Feedback Initiative have never been more important.

“There are significant opportunities for Oklahoma bankers to help influence positive change in this new regulatory environment,” OBA President and CEO Roger Beverage said. “We’ve tried to conduct a spring marketing campaign encouraging bankers to take the survey for the last four years, but with the changing of the guard in Washington, it’s more important than ever. Now’s the time for every bank to get serious about completing the anonymous survey.”

Beverage noted the Coalition of Bankers Associations, which created this survey and database, has created a short video that explains the purpose of the Regulatory Feedback Initiative and how it works. The video is available by clicking here.

We know spring is a challenging time for many of us, but if we’re going to be able to take advantage of the new administration’s more favorable view of your business, it’s critical we get every state bankers association to participate and, in turn, each of these associations – including the OBA – get as many banks as possible to participate.

Will you please help us? It’s painless. It’s anonymous. And you will help us set the tone for bank exams in this new Washington regulatory world where less is more.

Thanks very much.

Bankers visit Oklahoma delegation, urge quick passage of S. 2155

As this issue of the Update hits your desk, a group of more than 20 bankers is meeting with members of the Oklahoma Delegation.

“We’re grateful to Sens. Inhofe and Lankford for their unwavering support of Oklahoma bankers,” OBA President and CEO Roger Beverage said. “The goal now is to get the House to pass the Senate version and get it to the president as quickly as possible. And that’s going to take an effort to dislodge Rep. Hensarling, who appears to be miffed that the Senate bill doesn’t go far enough, and he’s offended by the ‘take it or leave it’ attitude of the Senate.

“The Majority Leader (Sen. Mitch McConnell [R-Ky.]) has stated clearly banking issues are done in the Senate, and it’s either S. 2155 or nothing. If this bill dies because Jeb Hensarling is offended by the Senate’s action, then my guess is bankers across the country will hang this needless loss around the neck of every House Republican that’s running for reelection. I can’t imagine that will end up with a good result for Republicans.”

Beverage noted the political environment in Washington is as volatile today as it was on the day President Trump was sworn into office.

“We are one tweet or one bomb dropped in Syria, or one more indictment away from throwing everything that’s now before the Congress into the trash before the November elections,” he said. “Time is not our friend, and Chairman Hensarling is being extremely stubborn about this reality. I hope some of his friends can persuade him to move this bill. There are about 1,200 bankers in Washington right now preaching to each of their members the same message, and on the heels of the ICBA’s spring summit, this additional pressure should help convince (Hensarling) to get over his anger and just pass the bill.”

FAQs on customer due diligence

As you know, the new rules about what your bank will soon be required to do – collect information about the “real” owners of some of your customers who do business as an LLC or partnership – are a major concern for bankers, and especially for smaller traditional banks operating in non-metropolitan areas.

The American Bankers Association has done a lot of work to help bankers ease into the new requirement. Over the next several days we will provide you with information about these new requirements and help banks understand what they’re required to do.

Previous FAQs issued by FinCEN, however well-intended, were not sufficient to provide meaningful guidance simply because there were elements of the new “beneficial ownership” rules that were not addressed. These FAQs are not etched in granite; rather, they are intended to be helpful by supplementing the FinCEN guidance.

What follows are some of the additional FAQs prepared by ABA, based on their conversations with experts, regulators and bankers.

Q: When will the banking agencies issue new exam procedures?

A: In October, when ABA met with the regulators to discuss updates to the existing FFIEC BSA/AML Examination Manual, we were assured the examination procedures for CDD would be issued as soon as they are finalized. We’re told that the agencies plan to publish the CDD exam procedures independently before they issue the updated exam manual.

Now that the FinCEN FAQs have been published, we anticipate the examination procedures will be made available in the near future, although it is not clear how soon they will be released. While the banking regulators have stated that exam procedures are not substantive, we recognize they are helpful in mapping out compliance steps and so we will alert our members as soon as the exam procedures are available.

Q: What should I do if I’m not sure about how to proceed?

A: Even though FinCEN has published additional guidance, there are still gray areas where expectations are not clear. The best approach for any financial institution is to look at the text of the rule and, based on your bank and your experience, outline a set of procedures for your institution.

Even though you might have to modify those procedures once more definitive guidance has been published, taking this step now will have two benefits. First, if you must later make changes, you have a road map where any changes will need to be made. Second, you will have established your best understanding of the rule in writing and it’s preferable to have an examiner challenge your analysis rather than you challenge an examiner’s analysis, particularly if an examiner bases an analysis to fill what is perceived as a gap in your procedures.

Q: The rule is the Customer Due Diligence Rule. Is CDD the same as beneficial ownership?

A: No! This is an important distinction. Beneficial ownership is determining who owns or who controls your customer if your customer is a covered legal entity. Identifying the beneficial owners is a straightforward process.

Customer Due Diligence is broader: It is considered part of your overall compliance program and requires you to know enough about your customers, whether legal entities or individuals, to be able to monitor for suspicious activity.

Q: What’s the relationship between the CDD rule and the Customer Identification Program rule?

A: The two regulations go hand-in-hand to ensure every financial institution has a good understanding of their customers. CDD applies to all customers and knowing who owns or controls a legal entity helps the bank understand the customer. Customer Identification Programs are the measures taken to identify and verify the identity of an individual.

Thanks to the ABA’s crack compliance team for providing these FAQs to help banks be better prepared to make the transition to these new rules!

2018 OBA Convention coming in May

The 2018 OBA Annual Convention & Trade Show is coming soon, set for May 21-23 at the Hard Rock Hotel & Casino in Catoosa.

This year’s convention theme is “Answer the C.A.L.L. (community/advocacy/leadership/legacy).
Lt. Col. Robert Darling, a retired member of the U.S. Marine Corps., who served in the first Gulf War and supported the president in the President’s Emergency Operations Center on 9/11, will give the keynote speech on May 22.

Darling is just one of many speakers presenting at this year’s convention, which will include author Will Bowen, representatives from The Baker Group, Hunton & Williams and Crowe & Dunlevy, among others.

For more information and to register, click here for the Convention brochure. Click here for the Convention Golf Tournament brochure. Questions? Contact the education department at the OBA at (405) 424-5252.

OBA Emerging Leaders joining in happy hour

Calling all OBA Emerging Leaders! Join your banking peers and some other friends in finance for a happy hour in partnership with the Young Accounting Professionals from the Oklahoma Society of CPAs from 5-7 p.m. on Thursday, May 10, at The Jones Assembly located at 901 W. Sheridan Ave. in Oklahoma City.

You can register for this get-together by clicking here. For more information, contact the OBA’s Megan McGuire at megan@oba.com or 405-424-5252.

2018 edition of OBA Directory of Banks now available

The Oklahoma Bankers Association Directory of Banks, 2018 edition, is now available for purchase. This annual booklet gives important information on all Oklahoma banks, savings and loans, savings banks and holding companies.

It’s available for purchase online by clicking here, or feel free to contact the OBA’s Thi Pham. Anyone wishing to order nine or more copies should contact Pham directly.

OBA education corner …

The OBA Convention is less than a month away, but it’s not the only thing taking place over the next few weeks! Take note of the following:

Beneficial Ownership for Frontline, May 1, webinar — New Bank Secrecy Act Rules go into effect May 11, 2018. These new regulations add rules on beneficial ownership of legal entities and new fifth pillar for BSA. During this webinar we will explain the new Customer Due Diligence rules line by line to your staff.
Loan Participations: What You Should Know, May 2, webinar — Learn the basic requirements for successful loan participations or syndications.
Understanding Commercial Loan Documents, May 2, webinar — Taught at a basic level (for bankers, not lawyers), the instructor will lead participants through all sections of the various required loan documents.
Flood Compliance Seminar, May 2, Oklahoma City — The program is designed for compliance officers, operations personnel, mortgage loan officers, loan originators and others involved in obtaining and maintaining flood insurance on mortgage loans.
Living Trust Documentation, May 3, webinar — This presentation will provide financial institution personnel with best practices to use when dealing with these complex legal documents
10 Critical Issues in Handling Trust Accounts, May 3, webinar — This webinar will cover standard trust-opening procedures and many questions that arise as trusts and account holder situations change.
Lending 101, May 7, webinar — This is a great training tool for newer lenders and processors, and the webinar will help even experienced bankers understand the source of the various requirements.
2018 Compliance Roundtable, May 8, Oklahoma City — Join for lunch and open discussion with Mary Beth Guard and Pauli Loeffler.
Vulnerability Management Improvements, May 8, webinar — This session will discuss the major risks that we face and outline a vulnerability management program that will strengthen the security in your institution
2018 Most Common Regulation O Concerns, May 9, webinar — This program provides the information needed by the lending, compliance and audit staff to assure ongoing compliance with the regulation.
Advanced Commercial Lending Series (register for all or separate days), May 9 – Advanced Financial Statements Analysis; May 10 – Advanced Tax Return Analysis; May 11 – C&I Real Estate Lending/Commercial Real Estate Lending — Commercial lenders, credit analysts, relationship managers and credit administrators would benefit from these programs.
FFIEC Mobile Services Guidance Review, May 10, webinar — In addition to the guidance, we will explore applied risk management concepts for mobile banking solutions.
Account Ownership Documentation, May 10, webinar — This program is an A-Z on account ownership and documentation.
Accounts Receivable and Inventory Financing, May 11, webinar — After completing this course, the participant will be less hesitant to enter this type of financing and will be able to recognize when Accounts Receivable and Inventory Financing is required; how to evaluate potential borrowers, and how to structure these transactions to remain in compliance with the regulatory authorities.