Hot Enforcement Climate is New Normal for Community Banks

NEW HAVEN, Conn., Jan. 14, 2015 (GLOBE NEWSWIRE) -- The Q4 2014 Banking Compliance IndexSM (BCI) reveals that, for the second year in a row, regulators issued more than 600 enforcement actions (EAs) against financial institutions in 2014. This sustained increase indicates that financial institutions must adapt to a new level of compliance scrutiny.

The index, compiled and analyzed by experts at Continuity, the New Haven, Conn.-based provider of a compliance automation solution for community financial institutions, found that the average community bank needed to devote more than $147,000 to manage the 302 regulatory changes introduced in 2014. Over the course of the year, the equivalent of 1.57 full-time employees (FTEs) were required to manage this incremental burden, a decrease from the previous year.

A chart accompanying this release is available at

Despite the small decline in the BCI, the EA rate held steady, and financial institutions paid enforcement action-related penalties of $4.6 billion in 2014.

"The rate of escalating enforcement actions isn't a surprising development—these levels represent the new normal," said Pam Perdue, executive vice president of regulatory insight at Continuity. "Over the past couple of years, we have consistently seen more than 130 enforcement actions each quarter. And the sad reality is that many of these enforcement actions are stemming from older regulations that bankers have years of experience addressing."

More than 4,000 pages of regulatory changes emerged in the fourth quarter of 2014 alone, but many enforcement actions focused on older regulatory statutes, including the Bank Secrecy Act and related anti-money-laundering laws as well as safety and soundness standards.

"The enforcement action data shows us that community financial institutions need to pay attention not only to new regulatory changes, but also to existing rules they've known about for years. The old standbys are still popular focal points for most regulators," Perdue said. "Regulatory obligations don't fade or disappear over time. To keep pace, community financial institutions must modernize the way they handle compliance if they want to successfully balance existing obligations with regulatory changes."

About the BCI

The BCI is calculated each quarter using a multivariate analysis that can be weighted across different contexts and is calibrated to determine the regulatory impact on financial institutions of varying sizes, product mixes, and regulatory oversight. Using key indicators including volume, velocity and complexity of regulatory change; time expended to meet regulatory requirement(s); and supervision and the enforcement climate, the BCI's sophisticated metrics are unmatched in the industry.

The BCI tracks:

  • Regulatory Changes: A total count of applicable financial regulatory changes throughout the quarter.
  • Page Volume: The number of pages associated with each of the regulatory changes—indicative of the complexity and workload involved with reviewing and interpreting each change.
  • Enforcement Action Information (EA): Analysis of the public enforcement actions that have been issued during a quarter.

The BCI employs a data-driven approach to provide unique insights into the depth and breadth of regulatory compliance workload impact measured in terms of a Full-time Employee (FTE) Consumption Score.

Over 675 financial institution professionals attended the Continuity RegAdvisor Quarterly Briefing webcast Thursday, January 8th. During this session, regulatory expert Pam Perdue reviewed the Q4 2014 BCI metrics and provided in-depth information on the quarter's regulatory changes, a workload assessment of these changes and the required actions to avoid penalties. A recording of this session is available at

About Continuity

Continuity is a compliance automation solution for community banks and credit unions that has been engineered to reduce the time, cost, and risk impacts of regulation. This single, unified solution automates the entire regulatory lifecycle—managing regulatory updates, policies, procedures, risks, vendors, audits, business continuity, and exam preparation along with compliance strategy and planning. Built by bankers and former examiners, an intuitive compliance management platform has been blended with expert personalized service to help community financial institutions quickly adapt to regulatory change, streamline the workload, and ensure compliance.

CONTACT: Sarah Eigner 720-726-5454

Source: Continuity