SIMPLIFYING A COMPLEX PROBLEM: STATE-LEVEL COMPLIANCE
R&C: Could you explain the challenges banks face in their efforts to comply with state-level obligations?
Stewart: For a national institution, or those planning to grow into having a many-state footprint, it is very difficult to manage regulations across each state in concert with federal requirements. It is an expensive information-gathering exercise and is required to be maintained. It will usually require a host of internal resources to satisfy, or expensive resources externally.
R&C: Based on your experience, how are banks handling the challenge of state-level compliance today?
Duffus: Generally, banks are handling state-level compliance in a static manner through one of two tracks: by employing resources and performing the work in-house, requiring a large, highly skilled team working across legal and compliance functions; or, through outsourcing state-surveys to a law firm, a Big 4 accounting firm, or other commercial providers.
R&C: What are the downsides to utilising state surveys?
Stewart: While important to organisational compliance, state surveys are a large expense. Unfortunately, that expense does not generally include maintenance, so the surveys are static and will need to be maintained by the institution and often become out of date quickly. The other thing that many institutions would like to do is look across their footprint and create requirements across jurisdictions. With significant effort, this is possible to do with surveys, but that new requirement can become out of date as quickly as it is employed across the business. Without a standardised tagging approach, it is difficult to identify related requirements and compare them.
Oct-Dec 2022 Issue
Wolters Kluwer