7 (+ 1) ways your core should help you control risk

It’s a fact… credit unions face risks. And while mounting compliance regulations are in place to mitigate your risks, they are very successful at contributing to your stress levels.  A recent study found that 98% of CU executives identify compliance burden as a top critical concern for their credit union in 2017.  Now more than ever, having the right credit union compliance tools in your arsenal can automate procedures so that risk analysis doesn’t turn into a time-consuming burden. Here are seven ways your credit union core software should be facilitating to prevent fraud and ensure the financial success of your credit union:

1. Your core should ease the burden of BSA (The Bank Secrecy Act) compliance with advanced reporting. Established in 1970 by congress as the first laws that require banks and credit unions to assist the government in detecting and preventing money laundering, the BSA places stringent rules and requirements on financial institutions to keep and provide detailed reports on member activity. Consequences in not complying with the BSA can result in significant fines or even losing your charter. At a minimum, your core system should automate the process and reporting of Suspicious Activity Reports (SAR) and Currency Transaction Reports (CTR).
2. Your core should provide AML (anti-money laundering) tracking. AML’s are the set of procedures, laws, and regulations that comprise the BSA. They require credit unions to detect and report suspicious activity, such as security fraud and marketing manipulation, that can be indicators of money laundering and terrorist financing.
3. Transaction monitoring technology is critical in assessing risk. Working in tandem with AML, this automated process reads through all transactions as they occur and flags any abnormal activity. The suspicious transactions (cash deposits, withdrawals, foreign currency exchange) will trigger alerts based on the rules each credit union sets to help it determine what is considered a deviation. This will vary by credit union based on factors such as location, geography, type of credit union, etc.
4. Core system software should keep track of the OFAC’s Watch List.  With the ever-changing world of politics, terror threats, and international crime, keeping up with the dynamic watch list of the Office of Foreign Assets Control can seem overwhelming. Your core should automatically keep your CU member data up to date and monitor for anyone appearing on the list and store the reports for future compliance review.
5. Having risk rating results on a dashboard report can help your credit union make better decisions. A custom risk rating matrix available through your core enables you to set risk thresholds, values, and criteria to rate your members.  Creating models for different account types, member types, geographies or services can ensure you have an encompassing view of your members. These results should be easily accessible and viewed.
6. Member Due Diligence is fundamental to risk assessment. Your core should provide a 360-degree view of your members. Transaction history, alerts, trending reports, case notes, and specific due diligence information about the member is key to maintaining visibility and determining if the member is worth the risk.
7. CyberSecurity is critical to your success.  Online banking, mobile banking, remote deposit capture and e-Signatures can all add risk to your current operations if not managed properly. It is crucial to trust your core provider to have measures in place to alleviate these risks.

PLUS:  Your core should provide educational resources to keep you compliant.  To that end, join FLEX and SimpliRisk for a free, 30-minute webinar to learn how your credit union can automate risk-based controls and compliance on Tuesday, March 28th at 2pm ET. Register HERE.