A Look Into A Crystal Ball

I have been hearing more often than ever from compliance and training officers, who are among the most apprehensive of our subscribers. None of them are particularly looking forward to 2003, which promises to be chock full of new regulations and mandated procedures.

Flood Insurance Problem
Compliance officers who, among all the other issues they deal with, are also committed to stay up-to-date on lending watched in amazement as the old year went out without Congress doing anything about renewing the National Flood Insurance Program. When they got back to Washington in January, the House finally took action on it, making it retroactive to January 1, but it took the Senate two weeks to follow suit. When reporting on the problems it caused, my friend and fellow editor, Lucy Griffin, said it most excellently in her latest issue of COMPLIANCE ACTION. She wrote, "Presumably, Congress believed that whatever it did give time to (such as being elected) was more important than needless and unproductive compliance burden dumped on an already overwhelmed industry."

Then add the fact that the Federal Emergency Management Agency (FEMA) is planning a vast remapping of flood-prone areas nationwide, as a study showed that two-thirds of the maps are more than ten years old and outdated by development. To be sure, those digital maps are many years down the road, but the fact is that the agency deems them necessary because, as one official put it, there are "potentially thousands of residents living unwittingly in high-risk zones" in the United States. We may be granting mortgages in areas that are in danger without our knowledge. But some officials ventured the opinion that Congress probably will not grant the necessary budget to do the remapping due to other legislation having to do with taxes. Those laws may make another area of our institutions take on the entire revamping of our tax configuration and reporting on interest paid.

PATRIOT Act
Training officers would like to gear up and organize their training for the requirements on the USA PATRIOT Act of 2001 - if they ever get them. We're told that we "probably" will have six months to implement all the mandated requirements once they are finalized, but administrations know that one major omission or mistake that results in media coverage will damage the reputation of the most dutiful financial institution. If a terrorist organization or individual manages to slip by our screening processes, it would be front page news. So the changes and training are vital to the health and welfare of every bank, thrift, S & L, and credit union.

Working with the Bankers Video Library, I wrote a training video for the PatAct back in September, thinking to finalize it (when we learned how that was going to be) and get it on the market when October 26 rolled around. My scripts are getting dusty! I can easily share the training officer's frustration at the delay and indecision.

SARs, etc.
Security Officers have to keep in mind the changes anticipated in the Suspicious Activity Report (SAR). Not major ones, we understand, unless we get the clarification asked for - and then there may be some major training to do to comply with new reporting.

Along with all the above, stir in the unprecedented rise in counterfeit check losses, the climbing number of rural and in-store robberies, the escalating number of cases of identity theft, the proliferation of internal thefts, and the increasing losses due to kiting and check fraud, and you have a look at what is coming at us in 2003.

Happy new year.

Copyright © 2003 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 12, No. 10, 1/03