Compliance Committee

The board is required to organize the compliance committee, which is chaired by the chief compliance officer. A typical committee in a small community bank would include the following members:

■ Chief credit officer (committee chairman)

■ Chief of operations and private banking manager (deputy committee chairman)

■ Chief financial officer (deputy committee chairman)

■ Manager of loan administration and credit analysis

■ Technology coordinator

The bank compliance committee may have the following subgroups, which will focus on specific compliance activities:

■ New Accounts, Customer Service, and Information Security and Technology Compliance

■ Credit Operations Compliance

■ Financial and Accounting Operations Compliance

The committee is expected to meet periodically (e.g., quarterly) or on an as-needed basis.

Duties, Responsibilities, Authorities, and Accountability of the Compliance Committee

The consumer compliance committee will be responsible for the following tasks:

■ Design, implement, test, proctor, and certify the compliance program.

■ Develop and continually update all bank policies and procedures.

■ Develop a continual training and educational program to train the staff, management, and directors on issues pertaining to compliance.

■ Develop an internal audit program to self-audit different aspects of the compliance functions using outside independent auditors.

■ Perform an annual risk-based audit program to identify areas of the bank operations that need auditing and the frequency needed to perform the audit.

■ Develop the compliance audit scope in light of a risk-based audit program, and screen outside independent auditors to identify the most qualified entity that can perform the audit.

■ Make recommendations to the board of directors regarding the outside independent auditor(s) and scope of each audit; the board of directors has final approval.

Perform internal auditing of the compliance of each subgroup in a certification program to ensure that each department has external oversight (e.g., the credit group would audit the operations group; the operations group would audit and certify the financial and accounting group; and the financial and accounting group would audit and certify the credit group).

Clearly, the formality of the compliance program will increase in direct proportion to asset size, complexity, or diversity (including geographic) of operations of the bank. The board of directors and upper management should discuss these needs as they develop and should promptly take action to meet these needs.

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