Conforma Compliance Group

A Brief Guide to the Bank Secrecy Act The Bank Secrecy Act (BSA) is designed to monitor monetary activities to prevent: ?? Money laundering of criminal proceeds ?? Financing of terrorist acts ?? Funding for other illegal activities The BSA is constantly evolving as criminals find new ways around existing regulations. A complete compliance program must include: ?? Internal controls to ensure compliance ?? Independent testing procedures ?? Compliance officers to take responsibility ?? Training for the operations team to ensure compliance and awareness ?? A Customer Identification Program (CIP) to help banks (reasonably) verify the true identity of their customers The BSA is one of the most important regulatory tools in the government’s arsenal. Acts of terrorism and financial crime require money—or generate money. By enforcing strong regulations, the government can track financial movements and identify risks. Reuters published a great introductory article on this topic. (Link in comments.) Is your institution struggling to keep up with the BSA? #BankSecrecyAct #Compliance #AML #RiskManagement #FinancialRegulations

AI Is Not Enough—And Likely Never Will Be There is a hope in the financial services industry that artificial intelligence will provide all of the compliance a company needs. While AI is already informing nearly all compliance activities, it’s unlikely to ever be enough on its own. Why? Shouldn’t AI be able to cover all the laws, rules, and regulations? Yes. It can. It can take a regulation, look to see that the boxes are checked, and ensure the information is where it’s supposed to be. The problem AI has is that it’s not creative. Compliance is designed to serve many purposes, but one of its major functions is to prevent fraud, money laundering, etc. AI can look for all the known ways those things can happen, but criminals are always looking for new methods. Human compliance officers can often “sense” something is wrong before they can see exactly what it is. Something small that is out of place or doesn’t make sense might not send up alarms for a machine, but the human mind will “sense” something is off and dig further. Artificial intelligence is an outstanding tool and can make compliance much easier—particularly as it continues to become more complex. Still, AI is not enough by itself. Humans are still vital to the process, and a professional compliance team can keep a financial institution out of a world of pain. Link to an interesting article from PYMNTS in the comments. Are you using AI for compliance? Is it working for your business? #AICompliance #FinancialRisk #AML #ComplianceStrategy #RegTech

SEC Extends Treasury Clearing Compliance Deadlines Big changes are coming to the U.S. Treasury market. The SEC’s Treasury Clearing Rule, which requires central clearing for Treasury securities, will eventually cover $4 trillion in daily transactions. But compliance just got more time. The SEC has extended key deadlines: ?? Cash market transactions – New deadline: December 31, 2026 ?? Repo transactions – New deadline: June 30, 2027 ?? Clearing agency compliance – New deadline: September 30, 2025 This delay gives financial institutions more time to prepare. But the rule isn’t going away. Market participants—banks, brokers, investment funds—must still ensure compliance with new margining, clearing, and risk management requirements. FICC, the only registered clearing agency for now, is working on rule changes to align with the new framework. Other players, like ICE and CME, are considering entering the space, which could add complexity. Financial institutions need to prepare now. ?? Evaluate transaction exposure – Will your trades require central clearing? ?? Review margining practices – Ensure compliance with segregation rules. ?? Update contracts and workflows – Clearing agreements, risk controls, and customer onboarding need to align with new rules. Delays don’t mean deregulation. The Treasury Clearing Rule is still coming. Is your institution ready? #TreasuryClearing #SEC #RiskManagement #FinancialMarkets #Compliance

Compliance is Not a Checklist—It’s a Culture Too many lenders treat compliance as a final step in the mortgage process—something to check off once the paperwork is done. But in today’s shifting regulatory environment, compliance needs to be a continuous, integrated process. ?? How Can Lenders Be More Proactive? ? Build compliance into the loan lifecycle—every step, from application to closing, should have built-in checks. ? Invest in continuous training—laws and enforcement priorities change; your team needs to keep up. ? Stay ahead of state regulations—what worked last year may not work this year, especially with CFPB uncertainty. State regulators are stepping in to fill the CFPB’s void. Lenders must be proactive, not reactive. Compliance should be part of your company’s culture, not just an afterthought. What steps has your organization taken to strengthen compliance this year? #ProactiveCompliance #MortgageLending #Regulations #FinancialRisk #CFPB

Navigating Uncertainty – The Cost of a Compliance Slowdown Uncertainty in compliance can be as dangerous as non-compliance itself. With the CFPB’s future uncertain and state regulators moving in different directions, what should lenders do to stay ahead? ?? The Cost of Uncertainty - Without a unified regulator, inconsistent enforcement across states could increase operational risks. - Reputation risk is at an all-time high—lenders that don’t adjust to the new environment could face public scrutiny. - Non-compliance today might turn into legal or financial trouble years down the road, especially for long-term lending products like mortgages. ?? How Should Lenders Respond? ? Stick to best practices—operate as if federal oversight is still in place regardless of the current climate. ? Monitor state-by-state changes—what happens in California or New York will likely influence other states. ? Train your team—front-line employees should be well-versed in evolving compliance expectations. Regulatory shifts are inevitable, but uncertainty should not lead to inaction. How is your team adapting to these changes? #ComplianceLeadership #RiskManagement #RegulatoryChange #MortgageIndustry #CFPB

State Regulators Step Up Amid CFPB Turmoil The Consumer Financial Protection Bureau (CFPB) has been effectively sidelined, leaving a significant regulatory gap in the mortgage and financial industries. While some lenders may view this as an opportunity to ease compliance efforts, state regulators are quickly stepping in to fill the void. For example: ? New York’s Department of Financial Services (NYDFS) has announced plans to expand enforcement efforts to ensure consumer protections remain in place. ? California’s Department of Financial Protection and Innovation (DFPI) is reviewing new consumer protection measures, reinforcing its role as a leading watchdog in financial regulation. ? Illinois and Massachusetts are also exploring stronger oversight mechanisms, signaling a broader shift in state-led enforcement. This trend means that instead of one set of federal guidelines, lenders will now have to comply with a patchwork of different state regulations—each with its own expectations and penalties. Warning: A fragmented regulatory landscape that makes compliance more complex and potentially more costly. With enforcement decisions now being made at the state level, financial institutions must be proactive, not reactive, in their compliance strategies. Are you tracking these changes in your operating states? #Compliance #MortgageLending #StateRegulations #CFPB #FinancialServices ?? Source: WSJ: Funding Cuts at CFPB Seen Leading to Regulatory Vacuum

In a recent article from Scotsman Guide, Niko Spyridonos wrote, “The current economic climate has created a perfect storm for refinancing. While interest rates are currently higher than the historic lows seen in recent years, homeowners likely will be looking to refinance their mortgages as rates continue to decline over the next six to 12 months.” He goes on to write that this might put a strain on the mortgage industry. Those massive volumes not only strain resources, but also require a more robust compliance effort. With inflation increasing last month and interest rates remaining stubbornly high, refinancing might have a slower roll than looked likely late last year, but it still might drive a lot of mortgages to be written. While Spyridonos is focused on the operations side, the compliance side will also need to be strengthened. You will want to make sure that your team has the clarity and direction they need to remain compliance focused. As we mentioned in some earlier posts, the disbanding of the CFPB is doing nothing to create certainty. What is your plan for compliance this year? Have you laid out a 2025 compliance strategy? Did you find yourself making changes after recent shifts in Washington? https://lnkd.in/gbh-yDwP #refinancing #compliance #mortgagelending #interestrates #CFPB

What compliance strategy aligns with the demise of the CFPB? Stay compliant. The laws haven’t changed. Since so many lending activities will play out over years, even decades, the actions you take today will be visible for a long time. Remain compliant with the laws and regulations as they are presently understood and be prepared to adapt as the environment evolves. The technique being used by the Trump Administration is called zero-based budgeting. Essentially, it means cutting the budget of every department, every staff member. Then, those departments are forced to come back to justify the amount of money they’re asking for. If the team from CFPB is reinstated by Congress or is able to get the administration to see their value, they could be back on the job soon. Remaining compliant will prevent your company from incurring significant reputational risk and fines because you decided that “while the cat’s away…” Already, many of the people being laid off by the DOGE are being recalled as it is recognized that their activities were vital. If, for example, the uncertainty of not having a federal agency over the mortgage and financial sector causes some of the biggest players to call the White House and complain, we might see the CFPB reinstated quickly. Make sure that you’re compliant. Contact us if you need some assistance plotting a course through this uncertainty. #compliance #lending #CFPB #zerobasedbudgeting #mortgage

The sidelining of CFPB, at first blush, seems like a great idea for lenders. After all, it might mean that we won’t have that bureaucracy to answer to. As Al Pitzner noted in his LinkedIn post from a few days ago, the CFPB “provide certainty to the MBS market by ensuring that originating lenders play by the rules.” The laws don’t go away when the police are actively working. So what seems likely to happen? Al notes, and we agree, that the states will pick up the slack. That will mean a patchwork of 50 states and more territories, all making their own laws and regulations. Operating on a multi-state basis lines will become more treacherous for lenders? as they will need to navigate a disparate set of state law and regulations. Places like New York and California are probably going to ramp-up enforcement. States won’t might not wait until after some lenders begin to engage in misconduct. The CFPB might have had “consumer” in their name, but they were a compass for the industry to know what was allowed, what wasn’t, and whom to ask. With the dismantling of the bureau, it remains to be seen who will fill the void. What do you think is going to happen without CFPB? #CFPB #mortgagelending #compliance #consumerprotection #regulations Image By G. Edward Johnson - Own work, CC BY 4.0, https://lnkd.in/gtEmBmR3

The CFPB's sidelining is not a good development for the mortgage industry. The CFPB doesn't just protect consumers, it helps provide certainty to the MBS market by ensuring that originating lenders play by the rules. The notion that we could descend back into a world were there was no true federal leadership and scrutiny of IMB's, and bank's originations processes, should concern everyone in mortgage. We should be worried about the possibility of bad actors returning to the space. Moreover, we need to consider the concern that could generate with investors who have a vested interest in ensuring that bad loans don't get pumped in to MBS offerings. I have heard the argument made that other regulators, HUD, OCC, FDIC, and/or DOJ will fill the empty CFPB space. This is fundamentally untrue. HUD is not a consumer protection entity, its job is to manage its programs and reduce risk to the MMI fund. Likewise OCC and FDIC exist primarily to ensure safety and soundness for banks, and not to ensure consumer lending law/regulation is followed. While OCC suggests that consumer protection is part of their mission, their focus is largely restricted to consumer banking activities, and not mortage. Further, OCC and FDIC to not regulate the activities of IMBs. Finally, DOJ is not a regulator, and only brings civil prosecutions based on referrals by regulators. This white space is expansive, so who might fill it? There is no federal entity. There are, however, 50 state banking/financial services regulators who, with a patchwork of regulations, statues, and enforcement approaches, are waiting in the wings to deviate from their normal examination and enforcement actives. These state actors will likely bring a new wave of aggressive tactics to cover the space not occupied by CFPB. The risk from the states is not truly appreciated. If an IMB operates under a 50 state licensing platform it can expect to be examined by state regulators 15-20 times each year. The cost for each examination may range anywhere from $3,000 to $5,000 or even more, per exam. This cost does not include the expense of fulfilling the exam, compliance change management/remediation, the assistance of outside counsel, and the potential costs of civil money penalties in the event of problematic findings. Other sanctions include license revocation, or even principals of a company being bared from future lending activities. The implications of such actions could affect a lenders license in every other state where that lender may hold a license. IMBs and lenders should ask the honest question, what's better, a fragmented scheme of regulation and enforcement, or one operated at the federal level that provides certainty, for the markets, state regulators and consumers? IMBs and lenders need to prepare for an environment that's a lot messier, more fractured, and more dangerous, than the one previously dominated by CFPB, it's right around the corner. #mortgage #compliance #CFPB