Why Are There BSA Regulations?

Why ARE There BSA/AML Regulations?    

As anyone in compliance can attest, there are myriad consumer compliance regulations.  For financial institutions, these regulations are regarded as anything from a nuisance, to the very bane of the existence of banks.  However, in point of fact, there are no bank consumer regulations that were not earned by misbehavior in the past.  Like it or not these regulations exist to prevent bad behavior and/or to encourage certain practices.   We believe that one of the keys to strengthening a compliance program is to encourage your staff to understand why these regulations exist and what it is the regulations are designed to accomplish.  To further this cause, we have designed a series of blogs that from time to time throughout the year, will address these questions about various banking regulations.  We call this series “Why is there….”

BSA- the Early Years  

Since the beginning of crime, there has been a need to hide the ill-gotten gains of criminal activity.  Early bad guys held their loot in caves.  Later, treasure chests provided a means of hiding criminal wealth.   However, despite the form that ancient loot took, the goal was and has always been to reduce assets to currency so that it can be used in exchange for other goods and services.   The need to take illicit assets or money and hide its source is known commonly as “money laundering”.  Criminals of all sorts engage in money laundering and have become exceedingly sophisticated in their pursuit of hiding the sources and uses of their money.

Because the “bad guys’ continue to evolve, the history of the Bank Secrecy Act (“BSA”) and Anti-Money Laundering laws (“AML”)   is one of ongoing change.  The laws that make money laundering illegal can be traced back to the Bank Secrecy Act of 1970.   Since the time the BSA was passed, there have been seven major legislative changes to the overall legislative scheme that covers this area.  These changes are;

  • Money Laundering Control Act (1986)
  • Anti-Drug Abuse Act of 1988
  • Annunzio-Wylie Anti-Money Laundering Act (1992)
  • Money Laundering Suppression Act (1994)
  • Money Laundering and Financial Crimes Strategy Act (1998)
  • Uniting and Strengthening America by Providing Appropriate Tools to Restrict, Intercept   and  Obstruct Terrorism Act of 2001 (USA PATRIOT Act)
  • Intelligence Reform & Terrorism Prevention Act of 2004

As technology has changed, so have the goals of many of the criminals that want to launder money.  In addition to drug dealers, there are terrorists, human traffickers, politicians and embezzlers, all of whom are developing ways to hide their cash.

Money Laundering

What exactly is money laundering?  Well FinCen, which is the federal agency that is specifically charged with monitoring and preventing money laundering defines it this way;

Money laundering is the process of making illegally-gained proceeds (i.e. “dirty money”) appear legal (i.e. “clean”). Typically, it involves three steps: placement, layering and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the “dirty money” appears “clean.” Money laundering can facilitate crimes such as drug trafficking and terrorism, and can adversely impact the global economy.[1]

Put another way, when criminals conduct their business, they almost always do so in cash, for what should be obvious reasons.   As early as the 1970’s federal regulators realized that without some regulatory help, financial institutions would be used as tools for disposing of the cash received from crimes.  Criminals would simply deposit their money in the bank, wait a few days and then make legitimate withdrawals.   Once the cash was co-mingled with other deposits, there would be no way to tell which money came from real legitimate effort and which was the result of crime.

Popular Schemes

Some of the more popular schemes for changing criminal cash into legitimate money include;

  • Black Market Foreign Exchange: In this enterprise, all of the participants are breaking one law or another.  On one end are importers of goods who do not want to pay the government rate for exchanging currency from US Dollars to the home currency (e.g. Peso’s).  These importers make a deal with a broker who is willing to import goods illegally.  The importer makes a deal with a criminal who has “dirty” US dollars.   The importer uses the “dirty” money to buy US goods and ships them to his own country.   The goods are then sold to the importers who pay the broker in local currency.  The criminal gets his money back in Pesos that are now “clean”
  • Investing in Legitimate Businesses: Here a criminal buys all or part of a legitimate business and simply mixes his cash in with the earnings of that business. This only works for business that already deal extensively in cash.  This is why gas stations, casinos, bars and check cashing stores are considered “high risk” for money laundering.  Because many professional service providers such as doctors and lawyers often take cash for payments, they are also considered “high risk”.
  • Smurfing: Sometimes a criminal will get a number of people working together to break up his cash deposits into small amounts.  This is called smurfing
  • Structuring: This is by far and away the most frequent form of attempted laundering.  Most people realize these days that a cash deposit above $10,000 has to be reported to the IRS.  Criminals have for years, tried to get around this limit by making deposits of smaller amounts on subsequent days. This is called structuring

Over the years there have been many different schemes for trying to avoid detecting of money laundering.  In fact there are simply too many to list here.  Suffice to say that there are criminal groups with nothing but money and time to try to figure out new and different ways to make “dirty” money clean.

What is the Money Used For? 

There are many different uses for money once it has been laundered.  Some of the more onerous uses include:

  • Drug Dealing Activity
  • Human Trafficking
  • Terrorist financing
  • Tax evasion
  • Embezzlement

As you can see, money that is laundered is used to fund extreme criminal enterprises.  This is why it critically important is that financial institutions do all that they can to lend a hand to legal authorities to stop money laundering.

Each of the changes in BSA/AML laws were designed to improve the overall monitoring of cash and cash equivalent transactions.  For small financial institutions, the changes have been ongoing and significant.  As the regulations changed, the expectations of the regulatory bodies evolved.  Today, no self-respecting banker would consider operating without a full BSA/AML compliance program.   Moreover, very few banks can get away with a manual system for tracking and aggregating the transactions of their customers.   Today, a sound BSA/AML program includes software that helps bank staff aggregate and monitor transactions of its customers.

 BSA/AML laws are really financial institution’s way of helping to keep the world a better, safer place.

[1] https://www.fincen.gov/news_room/aml_history.html  “History of Money Laundering Laws”

Banking Regulations to Watch in 2016

Regulations to Watch in 2016  

The New Year brings with it many different types of celebrations and traditions.  In the world of financial institution compliance the tradition for the New Year is to await the implementation of new regulations.  For the past several years, there have been a large number of new regulations that have been implemented.  Fortunately, the pace of new regulations has slowed dramatically and 2016 will not see a large number.   In fact, there are only two significant regulatory changes that will take place in 2016.  Despite this fact, as you plan for the compliance year, remember that the supervisory emphasis of the regulatory agencies can have the same impact as new regulations.

There are several sources for regulatory changes.  Regulatory agencies respond to world events, the political environment, resources allocations, technology and many other factors.   One valuable source of information that is often overlooked are the annual plans or statements that are issued by the prudential regulators.  All three issue a plan that addresses the areas that they will emphasize in the upcoming year.   In addition, there are many organizations and agencies that list the effective dates for regulations.  Gathering information on the new regulations and regulatory initiatives is a key first step for planning the compliance year.

Two (and one/half) Significant Changes

The most significant regulatory changes that will occur in 2016 are the flood insurance rules and changes in regulation Z that will expand the ability of small creditors to make loans with terms that would otherwise make them non-qualified mortgages without fear.   There is also the TILA / RESPA Integrated Disclosure Rule aka, “TRID” that went into effect in the final quarter of 2015.

Flood Insurance 

The flood insurance rules are likely to impact your institution in two significant areas.  First, for loans with a residence as collateral, there is now an exception for detached structures.  No longer will you have to get insurance for that random tool shed on the property that you have taken as collateral.  There are several considerations that go with this change.

The second change impacts the way that forced placed insurance may be charged to the customer.  In some cases, the customer may be charged back to the day that the policy lapsed for flood insurance.  Again, there are several considerations to make when applying this rule to your institution.

The flood rules also apply an escrow requirement for institutions that are over $1billion in assets.  We discussed these changes in detail in a three part blog that is on our website at http://www.vcm4you.com.  For more information, please review our blogs.

Regulation Z 

Another significant change is the expansion of the ability of small creditors to enjoy qualified mortgage protections for mortgage loans.  The CFPB described the change this way;

There are a variety of provisions in the rules that affect small creditors, as well as small creditors that operate predominantly in rural or underserved areas. For instance, a provision in the Ability-to-Repay rule extends Qualified Mortgage status to loans that small creditors hold in their own portfolios, even if consumers’ debt-to-income ratio exceeds 43 percent. Small creditors that operate predominantly in rural or underserved areas can originate Qualified Mortgages with balloon payments even though balloon payments are otherwise not allowed with Qualified Mortgages. Similarly, under the Bureau’s Home Ownership and Equity Protection Act rule, such small creditors can originate high-cost mortgages with balloon payments. Also, under the Bureau’s Escrows rule, eligible small creditors that operate predominantly in rural or underserved areas are not required to establish escrow accounts for higher-priced mortgages. [1]

This expansion creates a great deal of opportunity for smaller financial institutions to consider mortgage lending.  We will discuss this opportunity in detail in blogs to come in the near future.

TRID

The regulatory change that received the most publicity last year was the TILA / RESPA Integrated Disclosure Rule which was widely known as TRID.  This rule actually was implemented in the last quarter of 2015.  Since its start, several regulatory agencies have released examination procedures that indicate how they will treat financial institutions the first time new loans are reviewed for compliance with these rules.   According to many publications, technical or individual violations will be de-emphasized.  The main area of emphasis will be on the system for compliance that has been developed by the institution.

Regulatory Emphasis

In addition to changes in regulations, it is important to glean as much information as is available from the regulatory agencies about the areas of focus for examinations.  A change in the area of focus can have the same impact as a change in regulation.  For example, in the area of flood insurance when the focus changed from the appropriate amount of insurance to a review of flood notices, a number institutions that previously had satisfactory reviews found themselves with findings and in extreme cases, civil money penalties.   It is the change in focus of the regulators that often has many an institution asking “why were we okay at the last examination, but not now?  Fortunately, many of the regulatory agencies publish strategic plans which indicate the areas that will be emphasized for the year.    Here is a brief review:

CFPB

The CFPB’s Deputy Assistant Director for origination, Calvin Hagins, recently warned mortgage lenders of the four main examination priorities for 2016—loan originator compensation plans, the ability-to-repay rule, the TILA-RESPA Integrated Disclosures (TRID) rule, and marketing service agreements.

Speaking at the California MBA Legal Issues Conference, indicated that CFPB examiners will spend a substantial amount of time evaluating loan compensation schemes at every exam at every entity. [2]

OCC

The Office of the Comptroller of the Currency, in its 2016 strategic operating plan released the following priorities

  • Evaluating adequacy of compliance risk management and assessing banks’ effectiveness in identifying and responding to risks posed by new products, services, or terms.
  • Examiners will also assess compliance with the following: – new requirements for integrated mortgage disclosure under the Truth in Lending Act of 1968 and the Real Estate Settlement Procedures Act of 1974.
  • Relevant consumer laws, regulations, and guidance for banks under $10 billion in assets.
  • Flood Disaster Protection Act of 1973
  • The Servicemembers Civil Relief Act of 2003.

In addition, the OCC pointed out that fair access to credit will also be a priority;

  • Assessing banks’ efforts to meet the needs of creditworthy borrowers and to monitor banks’ compliance with the Community Reinvestment Act and fair lending laws.
  • Examiners at banks with more than $500 million in assets will continue to use the Fair Lending Risk Assessment Tool in their fair lending assessments. [3]

FDIC

The FDIC’s 2015 strategic plan is still in effect and it covers several years.  While this plan is not as specific in the areas of emphasis as some of the other agencies, the plan does mention that there will be an emphasis placed on consumer protection, the CRA and Fair Lending laws. [4]  We have interpreted this language to mean that UDAAP, Fair Lending and the Community Reinvestment Act are all areas that should receive attention at your institution before, the examiners arrive.

Federal Reserve

The Federal Reserve System in its annual compliance hot topics presentation that areas of focus will include regulation C (HMDA), Regulation B spousal signature rules and UDAAP.  [5]

FinCEN 

In the area of BSA/AML FinCEN is now taking comments about new rules for due diligence.  The original proposal was controversial in that it essentially required financial institutions to perform due diligence on the beneficiaries of accounts as well as in some cases, the customers of the financial institutions clients.  While it is evident that the proposal will be scaled back somewhat, it is also logical to assume that customer due diligence will be an area of focus for the FinCen in both the short term and the long term.

As you develop your audit plan and compliance risk assessment for the year, both new regulations and regulatory emphasis should receive strong consideration.  As a best practice, it is recommended that you contact your regulator and ask for information on areas of emphasis for 2016 and plan accordingly.

[1] CFPB Finalizes Rule to Facilitate Access to Credit in Rural and Underserved Areas- September 21, 2015

[2] Deputy Assistant Director for Originations, Calvin Hagins,  comments to California MBA Legal Issues Conference

[3] OCC Committee on Bank Supervision FY 2016 Operating Plan

[4] 2015 Strategic plan

[5] 2015 Strategic plan

Pitfalls to Avoid When Developing a Fair Lending Assessment-Part Two

Pitfalls to Avoid When Developing a Risk Assessment for Fair Lending- Part Two

In part one of this series, we made the argument that an individual risk assessment should be performed for the area of Fair Lending.   When performing the risk assessment there are several pitfalls that must be avoided.

Policies and Procedures

The review of institutions’ policies and particularly, its procedures is a basic and critical part to any risk assessment in the area of Fair Lending.

Potential Pitfall:  Policies and procedures can be fully in compliance with regulatory requirements and still have the potential for Fair Lending issues.  Review of the policies and procedures must consider both compliance with the requirements of regulations and the impact on customers!

First, these documents should be reviewed to determine that all of the required information is up to date and correct.  In this review, it is important that regulatory requirements such as “grossing up” income[1] in credit decisions, spousal signature rules and Fair Lending principles are included.  This review should also include a review of procedures to ensure that they match policies.

The second phase of the review should be completed to ensure that policies and procedures do not present the possibility of disparate impact.  In this review, the goal is to review the policies and procedures to determine the level of discretion allowed and how this discretion can be checked against Fair Lending risk.  For example, do the procedures require documentation of delays in processing loans?  Do policies and procedures emphasize the need for secondary review?

Credit Policies

Credit Policies are an area of particular concern in the Fair lending Assessment.  The review of credit policies should also be completed in two phases

Potential Pitfall: Credit policies should reflect the idea that the bank has made a reasoned decision about how it is meeting the credit needs of its community.  Policies that are fully compliant can become outdated quickly.  Review of credit policies should consider the changes in the assessment area and should reflect the business decisions of the Board.

Credit formulas and guidelines should be reviewed and validated independently to ensure that the data is valid.   Though these validations don’t need to be performed annually, it is a best practice to test the guidelines Vis a Vis adverse action trends at the bank.  Guidelines that yield an extremely high number of loan declines may need study and possibly adjustment.

In the second phase of the review, a comparison between the credit policies, the strategic plan of the bank and current economic data should be completed.  The purpose of this review is to determine that the bank’s credit policies and procedures match the credit needs of the community.   It is imperative that the Bank be able to document the business reasons for the list of products being offered.  For example, a decision by a Bank not to offer home equity loans when there is strong need for such loans in an assessment area, may be called into question during a Fair Lending examination.  A best practice is to have the economic data to demonstrate that these loans are not economically feasible at the bank, or that some other legitimate business reason exists for not making such loans.

Credit Decision Process

The credit decision process from the time of application to ultimately credit decision or withdrawal by the applicant should be assessed with an eye towards eliminating the ability of single bank employee from thwarting the will of the Board by engaging in illegal behavior

Potential Pitfall:  When reviewing adverse actions and withdrawals for timely notices, it is possible to overlook the warning signs of Fair Lending issues.

The review of adverse actions generally includes a check to make sure that notices are given within the timeframes required by Regulation B.  In addition a good review includes a check to determine that the information given is sufficient for the applicant to understand the issues that cause an adverse decision.   However, a best practice is also to review for Fair Lending ‘warning signs”.  For example, an extremely low rate of adverse actions is a strong indicator or pre-screening.  A high rate of withdrawals among protected groups is a strong indicator of discouragement.

It is a best practice to review the credit decision process to determine the ability of an individual to make credit decisions without oversight.  The more autonomy loan officers have, the more the system for secondary review should be empowered.

Lending Decisions

The traditional Fair Lending analysis focuses on a review of the approvals versus declines at the Bank.  A common practice is to review “matched pairs” which compares the low rated credit approvals with highly rated declines (loans that were barely declined).

Potential Pitfall:  If this is the heart of the analysis, then the bank is not getting the full story!  The analysis must look at the applicant’s total experience to ensure that all are getting the same considerations.

The analysis should consider:

  • Application to decision time-trends for members in protected classes
  • Comparative analysis- close decisions to approve versus decline
  • Pricing Analysis
  • Special considerations

o   Insufficient collateral frequently being given as a reason for decline

o   Large number of declines in a certain product area

  • High number of approvals versus a small number of declines

If all of the above is not part of the analysis that is being performed, then your bank may have potential Fair Lending issues that are going undetected.

Vendor Management

Financial institutions are charged with knowing and managing the results obtained from their vendors.  The regulatory agencies have made it clear that in every area from indirect auto lending to appraisals that they expect that financial institutions will monitor the results that they are getting from vendors.

Potential Pitfall:  If the review of the vendor ends with a background check, your institution may not be getting the full story.  The best practices require that the Bank pay attention to the results of the vendor’s efforts.  There has to be a general check that results are reasonable and consistent

The assessment must consider whether the results being produced are consistent and reliable.  For example, are appraisals being reviewed and compared to complaints?   Is it possible that certain appraisers consistently yield lower property values in certain income tracts?  Are flood insurance determinations being updated to match changes in the flood map?  The bank will be held accountable for the misbehavior of its vendors!

UDAAP Review

The risk assessment should include a review of the potential for UDAAP.  This is an area that is growing in scope and influence.

Potential Pitfall:  UDAAP is far reaching and can be easily overlooked.

The assessment should consider whether there is consistency in advertising and actual disclosures.  The risk assessment must look at the Bank’s products/operations from the point of view of the consumer.

Customer complaints are an area of focus for regulators.  Make sure that complaints are getting categorized and reported to the Board.  If no complaints have been received, there should be at least a policy and procedures in place to handle these once they do appear.

Advertising

Many community banks use testimonials as part of their marketing.  The relationship with the community is after all, one of the strengths of being a community bank.

Potential Pitfall:   A risk assessment that exclusively covers direct compliance with Reg. Z and DD may overlook Fair Lending concerns in advertising.

Risk assessment should cover the reasons for the advertising and the markets that you are attempting to reach.  Has the bank considered expanding advertising to nontraditional communities?   Are there communities within the Bank’s assessment area that are left out of the advertising and marketing?

Strategic Plan

Examiners expect that the Bank has direct knowledge of the credit needs of the assessment area.  This should be considered as part of the risk assessment

Potential Pitfall:  Without considering the overall strategy of the Bank, it is difficult to get the full picture of how the bank is addressing Fair Lending within its community

The strategic plan is most often not considered as part of the Fair Lending assessment.  However, in many cases, the examiners will start considering an institutions strategy in offering products to its community as a consideration of Fair Lending effectiveness.

A Fair Lending risk assessment is a critical component of effective compliance management.

[1] See reg. B at 202.6(b) 5

Developing a Fair Lending Risk Assessment

Developing a Risk Assessment for Fair Lending – Part One

Happy New Year!   As the new year begins, our focus continues to be on issues that are directly related to compliance.  One area that is often overlooked when assessing overall compliance performance is fair lending.  Very few financial institutions actually prepare a risk assessment for the Fair Lending area.  Generally, if there is a risk assessment, fair lending is including in the overall lending compliance risk assessment.  However, fair lending covers a wide range of compliance laws and disciplines.  A strong fair lending compliance program will include reviews internal controls in several key risk and compliance areas.  Fair lending is a separate, essential compliance discipline.

Why Fair Lending as a Separate Risk Assessment?

When we speak of this topic, we must first qualify that there is no one Fair Lending law.  There are a series of laws that come together to create the umbrella that we call Fair Lending.  These include:

  • Reg. B – Equal Credit Opportunity Act
  • Reg. C – Home Mortgage Disclosure Act
  • Reg. Z – Truth in Lending
  • Reg. BB – Community Reinvestment Act
  • Reg. Z -Advertising
  • UNDAAP – Unfair, Deceptive, Abusive Acts or Practices Act
  • Reg. DD – Advertising
  • State Laws

Logically, one could assume that since each of these areas are covered in the risk assessments of lending and/or operational compliance, that there is no need to do a separate Fair Lending assessment.   However, the fair lending assessment involves different considerations for compliance with the spirit of these regulations.

Fair Lending is not like any Other Area of Compliance

The Fair Lending review looks at the impact of practices at a bank to determine whether a violation has occurred.  Fair Lending is in fact, one of the areas of compliance where you may have met all of the requirements of a regulation and still have a violation!  Consider a credit scoring system that requires a minimum disposable income of $1,200 per month.  Suppose further that this minimum is applied equally and fairly to all applicants.  In the case where the minimum disposable income in one neighborhood of a bank’s assessment area is $900, that whole section would be excluded.  Suppose further that the section of the assessment area that is excluded includes the low-to moderate income tracts.  A serious Fair Lending concern has been born.   This is true even though there is nothing illegal or generally wrong about the $1,200 minimum.

Moreover, when considering whether Fair Lending or UDAAPP concerns exists at a Bank, examiners will consider everything from the relationship that the Bank has with its community, including   development of specific products and their overall impact on protected classes.   A “low cost” checking account that is being marketed to low to moderate income populations as an alternative to  check cashing outlets can be a noble idea.  However, if there are fees on the account that kick in to try to discourage certain behaviors, then what was once a noble idea can become a UDAAP concern.

Fair Lending Examinations Will Consider a Financial Institutions’ Relationship with its Vendors

It has become increasingly obvious that Examiners will review a Bank’s oversight of its vendors [1].  Regulatory expectations are that the financial institution must be aware of the reputation of its vendors and must make an effort to determine that the service provided is one that complies with all applicable laws and standards.  The CFPB specifically addressed the issue of indirect auto lending and its Fair Lending implications in recent initiatives [2].    The findings of Fair Lending problems and violations of the Equal Credit Opportunity Act will be addressed not only to the lender with the problem, but also to the financial institution, that is funding the lender.

One of the areas that will continue to receive scrutiny is appraisals.  Changes in Reg. Z for appraisals on high cost mortgages are a direct result of the financial crisis that we experienced and the role that fraudulent appraisals played.   While inflated values of properties were a major concern, the other side of bad appraisal practices is a Fair Lending concern.  When an appraiser constantly evaluates home prices at levels that are at the low end of the market, the expectation is that Banks will conduct research to ensure that these values are reasonable.   There should be clearly documented reasons for the property value conclusion.   Moreover, when reviewing the appraisal report, the financial institution Bank is expected to watch out terms that have been banned for some time (e.g. “pride of ownership”).

Financial institutions will be held accountable for the work performed for them by third party vendors.  This is an area that should be considered as part of the overall risk assessment of Fair Lending

Complaints, Social Media and Fair Lending

Another area that examiners will emphasize is the bank’s overall administration of the complaints process.   Most financial institutions already have a complaints log and a policy in place that requires staff to respond to a complaint in a reasonable time.  However, the expectation is that also for institutions to compile and categorize complaints and to report the results of this effort to the Board.  Do the complaints represent a pattern?  Are your customers trying to tell you something about the level of fees being charged?  Maybe there is a branch where discouragement is happening inadvertently.   The point is the complaints received should be analyzed for patterns and concerns. In addition, there should be evidence that the patterns noticed are being discussed with the Board.

As many institutions use social media these days, a completely new possible area of receiving complaints has opened up.  The expectation is that someone at the bank will review social media for the possibility of serious complaints that must be answered and included in the aforementioned analysis.

Advertising and Image in the Community

For an institution that has been in existence for many years, there is a rich history.  Many institutions want to use their history as a part of marketing.   There is nothing wrong with doing that- as long as the institution is sensitive to the possibility that during its lifetime, the make-up of its assessment area may have changed significantly.  Pictures and references to turn of the century events in which a bank was involved may have entirely different connotations depending on person or persons viewing the material.  For example, suppose an institution had an advertising campaign that made direct references to the fact that they had been in the community for over 100 years.   The marketing material produced showed various scenes from the community over the years.  Unfortunately since the ad campaign focused on history,  it did not include pictures from the present day.  The community had significantly changed in racial and social economic make up over the years.  The advertising campaign was roundly criticized by the community and the regulators and the bank narrowly avoided enforcement action.  It is clear that the intent of the program was not to insult anyone, but nevertheless great insult was taken!

Fair Lending is an Area that Requires a Separate Risk Assessment

Fair Lending has always been an examination area that is subjective.  Over the past few years, this area has become increasingly complex. The regulators have made it clear that this will be an area of emphasis that has the potential for enforcement action.   It is therefore, critical for banks to perform a risk assessment in this area.

In Part Two of this Blog we will discuss a formula for developing a risk assessment for community institutions.