Mandatory Annual Compliance Training for Banks

A mandatory annual compliance training course instructs a bank employee on various regulations to which a bank must conform in its operations. A bank compliance department's staff typically coordinates training programs throughout the year. Training sessions may be offered on the company's premises, at an academic institution or as part of a professional seminar.

A compliance course provides an attendee with tools needed to abide by regulatory requirements. For example, a senior customer service manager at a New York-based investment bank may learn about the Federal Reserve's (Fed) secure Web portal and how an institution reports daily reserve amounts. A training session also may show a participant how the bank manages financial risks in its activities, such as credit risk procedures, and techniques used to assess market risk in securities exchanges' transactions.

A compliance course coordinator may offer training sessions online, at corporate headquarters, on campus or at a professional event. To illustrate, consider a compliance manager who wants to learn about credit risk assessment procedures and how they may affect operating losses. She may log onto a secure website to take relevant courses and receive a pass/fail score or attend a local college's three-month summer program. Alternatively, the manager may participate in a training session organized by the bank's human resources staff or attend a Fed-sponsored seminar.

Compliance courses vary, depending on the bank's legal status (national or local and retail or commercial), industry and geography. These courses may cover financial risks, customer service regulations and anti-money laundering (AML) rules. For example, assume a senior accounts manager wants to learn about how a savings bank manages market risk in its operations. He may familiarize himself with complex math tools such as VaR (valuet at risk) and Monte Carlo simulation and how they're used to appraise market risk.

Courses that help bank employees understand how to conform to federal, state and local regulations provide many benefits to participants. An attendee could use courses taken to meet minimum continuing professional education (CPE) criteria that a state regulator often requires. Alternatively, a session participant may use skills learned to become productive and more familiar with customer information confidentiality procedures. A bank also may gain from a training program because awell-trained staff is more likely to abide by regulations.

Occasionally, a compliance training curriculum may cover subjects that are difficult or in which corporate staffs are inexpert. In these circumstances, a course coordinator may hire a specialist to elucidate complex topics. As a practical matter, a program supervisor at a small thrift may hire a former Financial Industry Regulatory Authority (FINRA) attorney to explain risk management procedures required in domestic financial derivatives transactions.