Deutsche Bank has agreed to a $150 million settlement with the New York Department of Financial Services over allegations of compliance failure in dealings with disgraced financier Jeffrey Epstein. "In each of the cases that are being resolved today, Deutsche Bank failed to adequately monitor the activity of customers that the bank itself deemed to be high risk," department Superintendent Linda Lacewell says.
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The coronavirus pandemic could cause loan losses worth $2.1 trillion for banks worldwide this year, according to S&P Global. The company expects the losses to swallow about 75% of pre-provision earnings.
US regulators' failure to reduce risk to financial stability created by nonbanks is contributing to the latest crisis, Federal Reserve Governor Lael Brainard and former Fed Chair Janet Yellen say. The Financial Stability Oversight Council's ability to oversee insurers, hedge funds, money market mutual funds and other nonbanks has been curtailed, Brainard and Yellen say.
FSAC Webinar: Governance Over AI and Robotics. Financial organizations have spent millions of dollars to secure software, train and hire exceptional personnel, and establish strong operational programs. How do you examine machine learning and institute a well-equipped audit program for robotics to ensure full coverage and mitigate the risk with these emerging technologies? Thursday, Aug. 6. Earn 1 CPE credit. Register today.
A report by the Financial Stability Board has found that global systemically important banks are better capitalized and more resilient under the post-2008 regulatory regime, which has resulted in higher funding costs for banks but lower risks for taxpayers. "As we are learning how the new system is working, we are also learning where it can still be improved," said Claudia Buch, vice president of Germany's Bundesbank and lead author of the report. "There are still gaps that need to be addressed, but the benefits significantly outweigh the costs."
Bank for International Settlements General Manager Agustin Carstens says a more comprehensive regulatory framework for the payment industry might be necessary, given the collapse of Wirecard. "One of the key aspects will be how different and nonbank participants and payment-service providers can be incorporated into the whole scheme," Carstens says.
Banks are resorting to layoffs at a time when they are seeing a deluge of applications for government relief, making compliance an ongoing challenge, according to the Office of the Comptroller of the Currency. Requirements regarding fair lending, data privacy and money laundering could be difficult to meet in the current environment.
The Justice Department has charged AML Bitcoin founder Rowland Marcus Andrade with wire fraud and money laundering in connection with an initial coin offering in 2017 and 2018. The Securities and Exchange Commission has filed separate charges accusing Andrade of breaching US securities laws.
Banks need to ensure their anti-money-laundering programs allow for effective monitoring of hemp growers, according to guidance from the US Treasury's Financial Crimes Enforcement Network, or FinCEN. Hemp, a form of the cannabis plant that is harvested for its fibers, was legalized in the US in 2018, while marijuana remains banned by the federal government, making it challenging for banks to do business with hemp producers.
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The US Secret Service is merging its electronic and financial crimes units into a single network called Cyber Fraud Task Forces, which aims to combat cyber-enabled financial crimes such as business email compromise schemes and ransomware attacks. The task force will focus on coordination and communication of best practices in investigations of financial cybercrimes.
Financial advisers and broker-dealers have been alerted by the Securities and Exchange Commission to an increase in ransomware attacks. The Office of Compliance Inspections and Examinations is urging SEC registrants to examine their cybersecurity defenses and to monitor communications from the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency.
FSAC Knowledge Brief: Considerations for auditing culture
Poor organizational culture can be a root cause of many serious issues. Internal audit faces a challenge in auditing culture because of its very nature. One solution is to use the "red flag" approach. Read more.
FSAC webinar playback -- Audit culture: A red flag approach
Join Wolters Kluwer Manager of Solution Consulting Toby DeRoche as he discusses a "red flag" approach to auditing culture. Watch now.
Success is not final; failure is not fatal: It is the courage to continue that counts.
Winston Churchill, prime minister
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
education and training events,
professional guidance, and advocacy. Learn more about
FSAC and how you can
add the center to your IIA membership.