Are other banks incorporating "minimum compliance standards" into their annual performance evaluations or some other quantifiable method to incentivise/motivate employees to not have so many violations/exceptions? We seem to have issues with the "yeah, so what, I wasn't in compliance" attitude and are looking for alternatives to help make sure we get this right. We have a template but are looking for ideas on what other banks do to include various goals/avoid obstacles.

We've discussed this before so some good searches will help you find prior threads.

Most banks hadn't done this and I doubt that changed. Banks that have, I applaud you. I personally think it should impact bonus/incentive pay the employee or officer receives. Noncompliance costs the bank. Why shouldn't the employee suffer if the bank had to endure additional expense to correct or pay for a error? Tellers lose incentive pay if they fail to balance.

Assigning the cost and responsibility will either be generic, or specific. That is, a flat cost per violation, or an assigned cost based on the problem. I think the former would be much easier to administer. And if the person has more direct reports, their tolerance should increase. By that I mean if there were 5 "costly" violations the person person responsible gets a 5. Say they lose $100 of bonus money at 10. The person the employee reports to gets a 5, but they are not penalized until they hit 30 because they have 3 direct reports. They may lose the same amount or something different. It depends on how close youhold their feet to the fire.

Upper management has started an accountability schedule for compliance. It is a "three strikes you are out" type of deal. It was implemented the beginning of this year and has been very effective. Compliance violations have significantly decreased and attitudes have changed.

I find that banks either do this voluntarily because they have a risk management point of view, or do it after getting slammed in an exam.

I actually worked for a bank many years ago that took compliance and loan exceptions into consideration for commercial lender bonuses! They didn't want problems.

I now frequently see even small banks with CIP exception tracking affecting bonuses, as well as other compliance violations. Most come up with a sliding scale (notice, reprimand, affects bonus, affects bonus, up to termination).

Rangers Fan: At a minimum it would be a good idea for BSA compliance. One of the BSA Exam procedures for examiners in the Internal Controls section of the Manual (page 40) is to determine whether the institution incorporates BSA compliance into job descriptions and performance evaluations of "appropriate personnel".