September 21, 2021
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Internal Audit Watch
The Office of the Comptroller of the Currency has fined Wells Fargo $250 million for "unsafe or unsound practices" in a loan-modification program and has found the bank in violation of a 2018 consent order. Meanwhile, Wells Fargo says a 2016 consent order from the Consumer Financial Protection Bureau has expired.
Full Story: CNBC (9/9),  The Hill (9/9),  The Wall Street Journal (9/9) 
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The Consumer Financial Protection Bureau has filed a lawsuit accusing LendUp of violating a 2016 consent order and misleading borrowers on installment loan costs. The CFPB also said the online lender failed to provide accurate and timely notice to applicants who were denied loans.
Full Story: PYMNTS (9/8),  American Banker (9/8) 
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How to Tackle the Five Common Adoption Hurdles
Not having an integrated analytics program can be a new kind of risk for today's audit teams — but it can be a challenge knowing where to begin. This playbook addresses the five most common hurdles when trying to adopt analytics, including what you can do to overcome each one. Download your copy.
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Risk Management
Acting Comptroller of the Currency Michael Hsu says banking regulators are working together on guidelines to help banks manage systemic risk posed by climate change. "To safeguard trust, banks and regulators must begin to take action now," Hsu says.
Full Story: Reuters (9/15) 
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The New Equation is a community of solvers coming together
We've all been told what one plus one adds up to. But if you bring together the right combinations of people and technology in unexpected ways, then it can be something greater. At PwC, it all adds up to The New Equation.
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Regulation & Compliance
An advisory committee of the Securities and Exchange Commission has moved to strengthen investor protection by recommending rule changes for insider trading and for disclosures from special-purpose acquisition companies. The changes would require a period of at least four months after a company executive acquires stock before the person can trade it, with a goal of discouraging insider trading, and would require plain English in SPAC disclosures.
Full Story: Pensions & Investments (free access for SmartBrief readers) (9/9) 
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Securities and Exchange Commission Chair Gary Gensler says that the regulator is reviewing potential conflicts of interest from payment for order flow and that a report might be issued in coming months. A ban of the practice is "on the table," Gensler says.
Full Story: Reuters (8/30),  The Wall Street Journal (8/30),  Barron's (tiered subscription model) (8/30) 
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The Securities and Exchange Commission has for the last several months been meticulously collecting information from fund managers and investment advisers on how they determine whether assets meet environmental, social and governance investing criteria, sources say. Former SEC enforcement attorney Morgan Miller, who is now a partner at law firm Paul Hastings, says ESG has become "a real area of scrutiny, particularly as it relates to disclosures."
Full Story: BNN Bloomberg (Canada) (9/3) 
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Creating value through internal audit
Creating value through internal audit — The reality is that all risks are not the same. Different types of risk need different approaches, methodologies, and skillsets; different reporting methods and tools; and different thinking to properly gauge the way they are managed. Learn more.
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Fraud & Ethics
BitConnect founder accused of defrauding investors
(Dan Kitwood/Getty Images)
The Securities and Exchange Commission claims in a lawsuit that Satish Kumbhani, founder of defunct cryptocurrency exchange BitConnect, has defrauded investors of an estimated $2 billion by making false claims about the firm's ability to make a profit. Kumbhani's colleague Glenn Arcaro, who ran a company that promoted BitConnect, has pleaded guilty to a wire fraud conspiracy charge.
Full Story: Reuters (9/1),  Department of Justice (9/1) 
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The US government moved after the attacks on Sept. 11, 2001, to cut off funding for terrorists by instituting the Patriot Act, but the act has yet to be fully finalized, and some financial sectors still do not face the same scrutiny as banks and brokers, Gary Silverman writes. "Literally you are drawing a map -- a pathway -- for getting around anti-money-laundering rules by not covering investment advisers," says Gary Kalman, director of Transparency International's US office.
Full Story: Financial Times (subscription required) (9/10) 
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A call to action on the three lines model
Shifting risk landscapes call for a shift in perspective. By encouraging coordination and alignment, The IIA's recently updated Three Lines Model can help alleviate some risk management challenges by empowering risk and control functions to fill in gaps, cut out overlaps, and actively contribute toward value creation for their organization. Learn more.
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Technology
The concentration of cloud computing services relying on artificial intelligence provided by a small number of companies handling data for financial firms poses systemic risk, says Gary Gensler, chair of the Securities and Exchange Commission. "We could turn around in the year 2027 or 2032 and say, 'My gosh, the crisis we just got was that everybody was relying on the same mortgage data or the same cloud provider, and the cloud provider puts an AI as a service on top of the cloud,' " Gensler says in testimony to the European Parliament Committee on Economic and Monetary Affairs.
Full Story: MLex (9/1) 
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The Securities and Exchange Commission has signaled it is willing to take a hard line against what Chair Gary Gensler has called the Wild West of finance -- the cryptoasset market -- by threatening to sue Coinbase over a plan to offer accounts that pay interest on cryptoasset holdings. The threat has intensified debate about the SEC's jurisdiction over cryptoassets.
Full Story: The Wall Street Journal (9/8),  BNN Bloomberg (Canada) (9/8),  Financial Times (subscription required) (9/8) 
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IIA News
Spotlight on shared success at the 2021 Financial Services Exchange next week
On Sept. 27, Mike Cowell, chief auditor at TIAA, will moderate a panel discussion, "Shared Success -- Coordination and Collaboration between the 2nd and 3rd Lines." Don't miss this chance to learn how to execute for shared success and course correct when things don't go as planned. Register now.
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New guidance on auditing business applications
Given the critical role of applications as enablers of business processes, a risk-based audit plan should include audit engagements that evaluate standardized and system-specific controls to ensure significant risks are covered. Learn why it's essential to provide assurance over the life cycle of a business application. Download the latest guidance.
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LEARN MORE ABOUT IIA:
COVID-19 Resource Exchange
You are not lucky to be here. The world needs your perspective. They are lucky to have you.
Jose Antonio Tijerino,
president and CEO of the Hispanic Heritage Foundation
National Hispanic Heritage Month is Sept. 15 to Oct. 15
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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.
IIA Resources
 
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E-mail: CustomerRelations@theiia.org
Phone: +1-407-937-1111
Fax: +1-407-937-1101

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