Question: How can the bank determine whether it is compliant with Red Flags?
Answer:
Risks associated with Red Flag non-compliance could jeopardize the health of the bank and result in compromised relationships with its customers, business partners and supply chain. To minimize this risk, the bank should follow a broad risk based approach to assessing its compliance. The general steps to this risk based discovery and assessment approach include:
Determine whether the bank has ‘covered accounts’ as defined by the rules to quickly define your “Red Flags Exposure Scope” (e.g. by business units, cost centers, suppliers or line of business)
For covered accounts perform a risk based assessment tied to the 26 Red Flags identified in Supplement A of the FACTA guidelines; the address discrepancy rules; and the change of address rules outlined in the regulation
Assign weighting factors to the key risk indicators of exposure that will be used to calculate a numerical Red Flags Risk Score
Establish Red Flags risk tolerance ranges for the bank
Based on the Red Flags Risk Score and how it compares to the established risk tolerance ranges, take the appropriate next steps
For low risk entities, document the results and move to the high risk entities
For high risk business units, suppliers or lines of business, implement compensating controls, management oversight, supply chain management and a comprehensive training programs to continually improve the areas at highest risk
Request an Evantix free trial to see how Evantix uses a unique, pioneering process to deliver vendor risk assessments based on a standardized scoring method that allows all stakeholders to easily evaluate risk, readily share this information, and drastically reduce the cost of risk and compliance management.
Evantix provides on-demand risk intelligence solutions that automate risk analysis for enterprises that outsource to their suppliers. Learn more at www.evantix.com; or contact Evantix directly at 949.614.7075 or Evantix Info.
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