Exam Management: It Doesn’t Have to be an Oxymoron…content.aba.com/briefings/3015075.pdf · Senior Manager (202) 663-5499 [email protected] ... Exam Management: It Doesn’t Have

ABA BRIEFING | PARTICIPANT’S GUIDE

Exam Management: It Doesn’t Have

to be an Oxymoron…

Wednesday, October 5, 2016 Eastern Time

2:00 p.m.–3:30 p.m. Central Time

1:00 p.m.–2:30 p.m. Mountain Time

12:00 p.m.–1:30p.m. Pacific Time

11:00 a.m.–12:30 p.m.

American Bankers Association Exam Management: It Doesn’t Have to be an Oxymoron… Wednesday, October 5, 2016 ▪ 2:00 – 3:30 p.m. ET

DISCLAIMER This Briefing will be recorded with permission and is furnished for informational use only. Neither the speakers, contributors nor ABA is engaged in rendering legal nor other expert professional services, for which outside competent professionals should be sought. All statements and opinions contained herein are the sole opinion of the speakers and subject to change without notice. Receipt of this information constitutes your acceptance of these terms and conditions.

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II

Table of Contents

TABLE OF CONTENTS ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II

SPEAKER & ABA STAFF LISTING ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III

SPEAKER BIOGRAPHY ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV

PROGRAM OUTLINE ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V

CONTINUING EDUCATION CREDITS INFORMATION ... . . . . . . . . . . . . . . . . . . . . . . . . VI

CPA SIGN-IN/SIGN-OUT SHEET ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII

INSTRUCTIONS FOR RECEIVING CERTIFICATES OF ATTENDANCE .. VIII

PROGRAM INFORMATION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ENCLOSED

PLEASE READ ALL ENCLOSED MATERIAL PRIOR TO BRIEFING. THANK YOU.

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III

Speaker and ABA Staff Listing

Speakers ELIZABETH M. SNYDER, CRCM Senior Associate, Financial Services Plante Moran 10 South Riverside Plaza, 9th Floor Chicago, IL 60606 (312) 980-3369 Plante Moran | Twitter | Facebook LinkedIn | Blogs STUART J. LEHR, CRCM Head of Regulatory Compliance Finacle, Infosys Limited 17384 Buena Vista Avenue Sonoma, CA, 95476 (314) 471-4158 [email protected]

ABA Briefing Staff CARI HEARN Senior Manager (202) 663-5393 [email protected] LINDA M. SHEPARD Senior Manager (202) 663-5499 [email protected]

American Bankers Association 1120 Connecticut Avenue, NW Washington, DC 20036 www.aba.com

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IV

Speaker Biographies

ELIZABETH M. SNYDER, CRCM Elizabeth leads Plante Moran’s regulatory compliance team. As a compliance specialist with more than 25 years of banking experience, she provides regulatory compliance and enterprise-wide risk management guidance for financial institutions. Elizabeth thoroughly understands the scope of business risks and the compliance process. Her knowledge of maintaining efficient operations while designing and implementing internal controls, policies, and procedures for complying with applicable local, state, and federal laws and regulations is an invaluable resource for the industry. Elizabeth has held numerous committee positions. She served as a member of the ABA Compliance Administrative Committee – she was Chairperson in 2009-2010. She served as Co-Chair of the ABA Regulatory Compliance Conference Committee in 2010- 2011. Elizabeth is a nationally recognized speaker presenting numerous seminars covering risk management, compliance, and customer service. Prior to joining Plante Moran, she served as Senior VP of Compliance and Risk Management for the Illinois Bankers Association, Executive VP of Risk and Compliance Management for Leaders Bank, VP of Operations at Founders Bank, and she spent nine years as a retail banking manager at Oak Brook Bank. STUART J. LEHR, CRCM Since January 2010, Stuart Lehr has been with Infosys Limited, as an Industry Principal for Finacle, their integrated banking platform core processing system. He is responsible for regulatory compliance related to Finacle. Stu has close to 30 years of experience in building and leading regulatory compliance risk management programs for several large, complex financial institutions including U.S. Bancorp, Union Bank, Washington Mutual, and Wells Fargo & Co. In addition to banking experience, he has also served as the Senior Director for Global Compliance Risk Management for PayPal, Inc. Stu has been active in the industry, primarily through involvement with the American Bankers Association. He has served on (and chaired each) the ABA’s Compliance Executive Committee, the National Regulatory Compliance Conference, and the Advisory Board for ABA’s National Compliance School and Graduate School for Compliance Risk Management. Stu continues with the ABA Compliance Schools as a faculty member. He has received an APEX award for “The Other Side” column which he has been writing for the ABA Bank Compliance magazine for the past seven years. In 2002, Stu was awarded the ABA’s Distinguished Service Award. Stu has a Bachelor of Arts degree in Psychology from Nebraska Wesleyan University, and a juris doctor degree from the University of Nebraska College of Law. It is unclear how he actually stumbled into the compliance field.


V

PROGRAM OUTLINE

TIMES SESSION AND SPEAKERS 1:45 – 2:00 p.m. ET

Pre-Seminar Countdown

2:00 – 2:02 p.m.

Welcome and Introduction Speaker Introductions 1Source International

2:02 – 2:35 p.m.

Proper Preparation Elizabeth M. Snyder, CRCM, Plante Moran Affable Attitudes Stuart J. Lehr, CRCM, Finacle, Infosys Limited

2:35 – 2:45 p.m.

Questions & Answers

2:45 – 3:20 p.m.

Disagreeing Diplomatically Elizabeth M. Snyder, CRCM, Plante Moran Other Tactical Techniques for Success Stuart J. Lehr, CRCM, Finacle, Infosys Limited

3:20– 3:30 p.m.

Wrap-up and Final Questions & Answers


VI

Continuing Education Credits Information

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The ABA Briefing, “Exam Management: It Doesn’t Have to be an Oxymoron…”

has been approved for 2.0 continuing education credits towards the CRCM designation.

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VIII

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9/27/2016

1

Exam Management:

It Doesn’t Have to Be an Oxymoron

American Bankers Association Briefing/WebinarWednesday, October 5, 20162:00 – 3:30 p.m. ET

aba.com 1-800-BANKERS


Disclaimer

This Briefing will be recorded with permission and isfurnished for informational use only. Neither the speakers,contributors nor ABA is engaged in rendering legal norother expert professional services, for which outsidecompetent professionals should be sought.

All statements and opinions contained herein are the soleopinion of the speakers and subject to change withoutnotice. Receipt of this information constitutes youracceptance of these terms and conditions.

9/27/2016

2


Presenters

Stuart J. Lehr, CRCM, Global Regulatory Compliance, Finacle, Infosys Limited

Elizabeth M. Snyder, CRCM, Senior Associate, Financial Services, Plante Moran


Agenda

• Proper Preparation

• Affable Attitudes

• Disagreeing Diplomatically

• Other Tactical Techniques for Success

9/27/2016

3


Proper Preparation

Boy Scout Motto Girl Scout Law

Be Prepared…the meaning of the motto is that a scout must prepare himself by previous thinking out and practicing how to act on any accident or emergency so that he is never taken by surprise.

Robert Baden‐Powell

I will do my best to behonest and fair,friendly and helpful,considerate and caring,courageous and strong, andresponsible for what I say and do,and torespect myself and others,respect authorityuse resources wisely,make the world a better place, andBe a sister to every Girl Scout.


Proper Preparation

Who? What? When?

Where? Why?

9/27/2016

4


Proper Preparation

• Your primary regulator? – CFPB– OCC– FDIC– Fed– State

• Secondary or other regulator?– (See above list)– FinCEN

• External auditor?• Internal auditor?• Other?

– Department of Justice?– State attorney general?


Proper Preparation

Fair Lending

CRA

BSA/AML

UDAAP

Vendor

or other

Third Party

Targeted

Transactional testing of

Deposit and Lending

Regulations as applied

The Bank

Evaluating your

Compliance Risk

Management Program

You

What

9/27/2016

5


Proper Preparation

• Planned periodic exam? (See it coming)• Special announced exam? (Some notice)• Special unannounced exam? (Surprise!)

• Start NOW– If you don’t already have a roadmap for information

retrieval, you’re already late.– Have a plan for the possibility that in completing an

information request you might uncover other issues. (Keep in mind it may need to come from a vendor.)


Proper Preparation

Onsite at your bank?

Offsite from your bank?

Onsite at your operations center?

Onsite at your vendor?

9/27/2016

6


Proper Preparation

• It’s simply that your periodic exam is due.• It’s a special exam because of an industry issue focus.• It’s a special exam because of an issue focus on you

in particular.• The agency has received a large number of

complaints on your bank.• The agency has received a large number of

complaints on your vendor.• (Other???)


Proper Preparation - Groundwork

Goal is strong rapport built on:

Trust

Respect

Credibility

Transparency

Not an adversarial relationship based on

Pattern of non‐compliance

Failure to address issues

Confrontational approach

9/27/2016

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Proper Preparation - Communication

• Communicate often

• Be proactive, not reactive• Be open to ideas• Don’t hesitate to initiate communication:

– Change in strategy– Emerging issues– Self-identified issues

• Reach out at industry events


Proper Preparation - Tailoring

• Consider how preparation needs to accommodate based on:– The size of your bank or entity being examined– The fact it is “indirect” (i.e., a third-party or vendor you use)

• Sometimes the past is prologue:– Do you have a “history” with this agency/entity? (And is it

negative or positive?)– Do you have no history (the good news is that you have a

clean slate, the bad news is that you may not know what to expect)

9/27/2016

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Affable Attitudes

Winne

the Pooh

• A little Consideration, a little Thought for Others, makes all the difference.

Irving

Berlin

• Our attitudes control our lives. Attitudes are a secret power working twenty‐four hours a day, for good or bad. It is of paramount importance that we know how to harness and control this great force.

Unknown

• Humor prevents a hardening of the attitudes.


Affable Attitude: Understand the Examiners’ Perspective

• The role of the examiner is to evaluate:– How the bank identifies its compliance risks;– Soundness of the compliance management system;– How well that system is working to ensure

compliance.

• Purpose of the exam:– Detect possible violations;– Foster strong compliance and risk management;– Monitor risk.

Note: This need to understand applies to not just to the Compliance Officer but to everyone (including executives) in the organization. How do you manage that?

9/27/2016

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Affable Attitude: Understand the Examiners’ Perspective

• Different types of examiners:– Checklist questioners;– The Columbo approach.

• Examiners have varying degrees of training and experience.

• Examiners and compliance officers have the same goal – COMPLIANCE WITH THE REGULATIONS.


Disagreeing Diplomatically

“I don’t have to agree with you to like you or respect you.”

Anthony Bourdain

“A long dispute means that both parties are wrong.”

Voltaire

9/27/2016

10


Why Do Disagreements Happen?

Misperception by either side of what they were asked or

told.

Wrong facts or incomplete

documentation or data.

Personal opinion or bias of how

something should be done.

Lack of knowledge.Personality clashes.

Differing Perspectives.


First…is it Really a Disagreement?

• Verify the facts as they have been presented.

• Clarify any misunderstandings and reiterate important information.

• Ask direct questions to understand what is the concern.

9/27/2016

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Disagreeing Diplomatically

RulesDon’t come out swinging with the “wrong bat.”

Stay courteousand professional even if tensions

rise.

of Be respectful.Removeemotion.

Engagement Don’t criticize.Aim to “clear the air” rather than

“to win.”


Thoughtfully Present your Case

• Frame your argument by understanding whether the issue is related to law, a rule, guidance or interpretation.

• Present your understanding of what the issue is, and why you do not agree.

• Present facts and documentation to support why you do not agree.

• If you have a different interpretation from the examiners, demonstrate the reasoning and process behind your conclusion.

9/27/2016

12


Deliberation Phase…and Beyond

• Give the examiner time to understand your viewpoint.

• Examiners are human and can make mistakes just like compliance officers do.

• Pick your battles – is finding something wrong worth going to battle over it?


Escalating the Issue

• Bank management – with the board’s support –should question findings and assumptions through proper channels:– Start with the examiner in charge (EIC);– Then work your way through the agency’s established

escalation process;– As a last resort, escalate to the agency’s Ombudsman and

appeals process.

9/27/2016

13


Other Tactical Techniques for Success

“Great minds discuss ideas; average minds discuss events, small minds

discuss people.”

“I have not failed. I’ve just found 10,000 ways that won’t work.”

“You have to learn the rules of the game. And then you have to play

better than anyone else.”


Do a Technology Controls Review from a Vendor Solution Perspective

Rating Considerations

How easy or practical would this process be without the technology solution?

What level of impact would there be to the business to implement an alternative control?

Is this control critical to mitigate multiple risks? Multiple business lines?

How likely will there be regulator criticism over manual or other non‐system controls at Exam time?

9/27/2016

14


Dealing with Vendor Vexations (Generally)

• What options do you have when your need is outside of the “four corners” of the contract?– In the short term

• User Group as a bargaining unit?• Professional persuasion?• Pony up the money for Customization

– In the long term• Ensure involvement with the renewal/renegotiation of the next

contract.• Push for reassessment of vendor selection.


“Vendorpendence” during Exams

What about dependency on your vendors for information that is critical during your examination?

• Documentation in their hands that you need ASAP for the examiners?

• Analysis requests of data that only they can run?• Other assistance you need that takes resources on

their side?

9/27/2016

15


Dealing with Exam Aftermath

Review

Evaluate findings and analyze impacts. What do you need to do? Who needs to know about

it?

Report

Ensure that the right levels know the right

amount. It’s about your assessment, and actions they need to support.

Remediate

Nothing’s worse than finding a problem,

reporting on a problem, and then ignoring the

problem. Someone’s got to fix it.

Revise

Post‐exam is a perfect time to benchmark your program.

You’ve just gotten a scorecard full of KPI’s.


Session Takeaways

Attitude can save you or

sink you.

It’s your choice.

When disputes do inevitably happen.

Play the “long game”

And speaking of game, know the rules and

make the smart play.

Prepare

Prepare

Prepare

Prepare

9/27/2016

16

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TheEnd

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Questions and Answers

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32

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Documents

Exam Management: It Doesn’t Have to be an Oxymoron…content.aba.com/briefings/3015075.pdf · Senior Manager (202) 663-5499 [email protected] ... Exam Management: It Doesn’t Have