SWIFT CEO: Banks must have strong internal controls to stop fraud | Report: Canadian retail banks' sales practices need tougher controls | GDPR means higher compliance costs for banks
May 15, 2018
IIA Financial Services SmartBrief
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Internal Audit Watch
Commentary: Don't let bullying get in the way of internal controls
Bullying within the ranks at a financial institution can occur in many situations, including managers directing such behavior toward internal control staff or auditors, banking veteran Ed O'Leary writes. Banks need to be "aggressive about rooting out those bullying behaviors or tendencies" in their culture, as "[t]hese can undo all our good work in the areas of morale and effective internal controls," O'Leary writes.
Banking Exchange (5/3) 
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SWIFT CEO: Banks must have strong internal controls to stop fraud
Insider fraud at banks often can be "traceable to a lack of internal controls," said Gottfried Leibbrandt, CEO of the Society for Worldwide Interbank Financial Telecommunication. The system of controls at SWIFT focuses not just on IT but also on people and processes, he said.
The Economic Times (India) (5/9) 
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Regulators & Auditors Connect This October
Described by attendees as both excellent and relevant, the Financial Services Exchange offers a unique atmosphere for regulators and internal auditors to exchange ideas, discuss practical strategies and tools for positive outcomes, and network with their peers. Register before Aug. 6 to save $125.
Risk Management
Report: Canadian retail banks' sales practices need tougher controls
A report from the Financial Consumer Agency of Canada says banks in the country must heighten their controls and governance to protect adequately against retail banking culture's heavy focus on sales. "Operational management, compliance and risk management, internal audit, and human resources lack the frameworks needed to adequately address sales practices risk," the report says.
Reuters (4/26) 
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FSAC eWorkshop: Maximizing the Value of Audit Interviews
Learning to effectively communicate and easing the concerns of the auditee is as important as an effective audit process. This course takes attendees through the interview process, providing leading practices for each step, including how to manage different personality types. June 25-28. Earn 8 CPE credits. Register now.
Regulation & Compliance
GDPR means higher compliance costs for banks
Companies are spending millions to comply with the EU's General Data Protection Regulation, which comes into effect May 25. "Big banks, fund companies, large insurance companies are all working through large GDPR compliance efforts," said Jeff Sanchez of Protiviti.
Bloomberg Professional Services (5/2) 
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Treasury reminds financial firms about customer due diligence rule
The Treasury Department's Financial Crimes Enforcement Network said the final version of its new customer due diligence rule has taken effect and that financial institutions must now begin complying with it. Among the new provisions is the requirement that financial firms identify and verify the identity of anyone who owns 25% or more of any legal entity and the identity of the person who controls the entity.
ThinkAdvisor (free registration) (5/14) 
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Survey: 3% of community banks ready for CECL
Among community banks surveyed by the Risk Management Association, 3% say they are ready for an upcoming standard for setting loan and lease losses. The current expected credit loss standard takes effect March 31, 2020, for institutions that report to the Securities and Exchange Commission.
Banking Exchange (5/9) 
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Fed: Bank holding companies remain complex in Dodd-Frank era
This analysis by the Federal Reserve Bank of New York finds that, while banks have simplified operations since the financial crisis, they remain highly complex. Bank holding companies have retained tax havens within their organizational structures.
Liberty Street Economics (Federal Reserve Bank of New York) (5/7) 
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Save up to $230 on CIA Application in May.
Until May 31, The IIA is helping you show the global sign of success by waiving the application fee for the Certified Internal Auditor® (CIA®) designation. With CIA after your name, you are recognized the world over as an internal auditor with more -- more understanding of the International Standards for the Professional Practice of Internal Auditing, more proficiency, and more credibility. Apply for free today.
Fraud & Ethics
Some banks' Zelle use leaves customers open to fraud
Many customers have lost money to hackers and con artists who abuse payment service Zelle. Some banks have implemented Zelle "without any protections," leaving customers vulnerable, says financial-crime specialist Genevieve Gimbert.
The New York Times (tiered subscription model) (4/22) 
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Let the Experts Come to You.
With IIA On-site Training, your audit team will benefit from expert, personalized, and in-depth training delivered by seasoned internal audit practitioners. This flexible and cost-effective training is developed based on your organization, your team's needs, and your critical learning objectives.
Report: AI could eliminate 1.2M banking jobs
About 1.2 million banking jobs could be eliminated by 2030 as banks increase their use of artificial intelligence, according to a report by Autonomous Research. However, a separate study by Accenture finds that the industry may have a net gain in jobs because of AI.
American Banker online (free content) (5/7) 
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BofA uses AI for chatbot, trading, security
Bank of America chatbot Erica is available in 10 states and uses artificial intelligence to understand speech and text, as well as customer data. The bank also uses AI for fraud detection and trading.
American Banker online (free content) (5/11) 
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White Paper: KRI Basics for Financial Institutions.
This white paper will provide you with a foundational understanding of Key Risk Indicators (KRIs). Learn why you need KRIs and discover how to get started with examples of KRIs for banks and credit unions. Develop and build your own KRI program that is consumable, flexible and sustainable for your organization. Download your white papper now >>
IIA News
FSAC brief: Maximizing internal audit's role through co-sourcing/outsourcing
Two chief audit executives and a provider discuss maximizing the value of internal audit through co-sourcing and outsourcing and share lessons learned that are applicable to organizations of all sizes. Read more.
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Add the Center
The Financial Services Audit Center is the premier resource for auditors in the financial-services industry, delivering low-cost, high-quality knowledge sharing as well as relevant reporting on trends, benchmarking and critical content. Learn more.
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What, after all, has maintained the human race on this old globe despite all the calamities of nature and all the tragic failings of mankind, if not faith in new possibilities, and courage to advocate them.
Jane Addams,
social activist
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About the IIA Financial Services Audit Center (FSAC)
FSAC is an IIA specialty center for audit professionals in the banking, asset management, and insurance sectors. FSAC advances the professional practice of auditing in the financial services industry through thought leadership, education and training events, professional guidance, and advocacy. Learn more about FSAC and how you can add the center to your IIA membership.
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