The Pace of Compliance

Ordinarily at this time of year, the compliance world is beginning to slow down a bit. By June, the pace of regulatory developments has slowed and the only thing left up in the air is whatever may be pending in Congress. Since Congress usually completes action late in the year, especially in election years when they take time off to campaign, we can count on the remainder of the year being somewhat predictable.

This year is different. In fact, this year is really different. This year, the regulatory action seems to be on all fronts. It also seems to be incessant. We can always count on the March commentary update to Regulation Z. We expect some minor updates to Regulations B, C, and E. We have become used to the evolutionary nature of CRA. And in recent years, we have come to think of deposit regulations such as Regulations CC and D as fairly stable.

This year, there has been a steady stream of proposals coming from the FRB to update Regulation Z or implement new statutory provisions. It is not often that we see so many changes to Regulation Z in one year.

But the developments don't stop there. The commentary update to Regulation B contained several significant provisions, including treatment of credit scoring. Developments in Regulation B will have an impact on both CRA and fair lending.

This is the year we begin to live through the change of focus for CRA. This transition really began when the new regulations were issued. This change process will continue until all banks have converted to the new regulation and examiners have become comfortable with the new process.

And on the deposit side, we waited for possible change on how to calculate APYs during leap year. This is now moot because February 29th is now behind us and the FRB has withdrawn the proposal. But deposit compliance doesn't stop there. Regulation CC is being tinkered with, although hopefully for the better.

And Regulation E is changing.
Perhaps the most momentous changes involve those generated by FinCEN. We have new forms and procedures for filing CTRs. We have new forms and procedures for reporting suspicious activity. The training schedule alone is daunting.

Much of this change is for the better. The FRB is truly responding to industry concerns by streamlining regulations and providing more interpretive guidance. FinCEN has made significant improvements to CTRs and SARs. But change still means work. No wonder we feel frazzled. This summer will not be spent at the beach!

Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 9, 6/96