Academic journal article ABA Banking Journal

When and How Often Must Board OK Policies?

Academic journal article ABA Banking Journal

When and How Often Must Board OK Policies?

Article excerpt

Q. We are an FDIC-regulated community bank. During our last exam it was strongly recommended that we create policies and procedures for all compliance-related regulations and laws.

Now that these policies are drafted, I am concerned about how often our board will need to review and approve them. Our processor states that not all regulations require a policy--but that if you choose to create a policy it requires annual approval by the board. That could be burdensome. A peer at another bank suggested that the board review all policies every three years or as needed. Is there any guidance available on this issue?

A. There are no statutory requirements and I am not aware of any regulatory requirement--with the exception of BSA/AML and FACTA/Red Flags--that the board should review and approve compliance policies annually. (Note, however, that the Basel II compliance statement recommends annual review and approval of a bank's compliance program, which would include its policies.)

Please note: New policies should be presented anytime there is a change in the law or regulation that impacts the bank. …

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