Banking Regulatory Compliance Requirements of Paperless Systems

If you’ve worked for a bank for more than a few months, chances are, you’ve been through an audit. You know the drill. 1 – 2 days of warning, followed by a hectic scramble to clean your files, desk, and office and to make sure that everyone has the right keys to the filing cabinets. Have you shredded all the documents that should have been destroyed? Do you have sticky notes with client information on your desk? Are all the office and cabinet keys accounted for and the key logs up-to-date?

Then the auditor comes and you spend 2 days attempting to get some work done, but you find yourself critically handicapped by regulations. You run to the filing cabinet numerous times only to remember that you did lock it (like you should have), and you have to run back and get the key again. You provide the files to the auditor, and you sit on needles hoping that you didn’t accidentally leave a document in the file that should have already been shredded according to retention guidelines.

It’s so much work!

Isn’t there an easier way to not loose so many full days of productive work every time you have to prepare for an audit?

Or even worse, what if you don’t pass and you have to face the consequences? Minor consequences result in additional time spent in training, possibly probation, and can even result in severe disciplinary action. If it’s an external audit, your institution might be subject to fines, sanctions, and reputation risk.

The banking and financial industries are some of the most regulated in the United States and throughout the world. Complex, strict rules and procedures that govern the interactions between banking institutions and the millions of customers they serve on a daily basis create an entire category of need for processes, workflow, and organization: regulatory compliance. Meeting those requirements consistently requires immense amounts of time, attention, energy, intelligence, and even creativity.

Many of the bank employees and management who find themselves responsible for regulatory compliance often ask themselves, “Isn’t there a better way to keep up with this?” Well, in this age of software and apps for everything, there are methods that are better than traditional paper and filing cabinet management of documents.

Secure document management and retention software has been developed specifically with those needs in mind. In fact, at eFileCabinet, regulatory compliance—including security and retention logic—is purposefully built into our document storage and management products.

Efficient Regulatory Compliance Using Paperless Systems

With the increased capabilities of software and technology, many financial institutions are turning to paperless software systems to meet their obligation to maintain regulatory compliance standards with internal documents. However, if a bank chooses the wrong solution, the cost can be catastrophic. Regulatory fines related to non-compliance with FINRA totaled over $60 million in 2013 alone.

So how does a bank choose a document management system that can help it meet its compliance obligations? What are the features of an adequate paperless document storage system that can be used to help banks, credit unions, and other financial institutions to efficiently maintain compliance?

Paperless Bank Compliance Tools—Technical Requirements

  • A Secure Database: Data encryption is mandatory for storing financial documents. Some document management software’s/systems (DMS) make use of external encryption protocols to maintain security. This approach is weaker than what is required by compliance standards.  A good DMS will have built in encryption, preferably no lower than 128-bit; it’s obviously safer to use 256-bit encryption. These DMS products will not allow for “back door” review of documents and will require that each individual user sign into the software with individual logins and passwords.
  • Automated Retention is a must for compliance. Depending on the specific verticals of the documents, various policies must be observed. All investment applications, marketing materials, and related documents must be locked down and kept from deletion and editing permanently. Yet other materials have specific shredding or purging deadlines. A good DMS will allow the financial institution to automate these retention requirements based on the department and verticals of the documents.
  • Role-Based Security: Tellers should not have access to mortgage documents or investment account information. Likewise, non-licensed employees should not have free reign of investment or insurance solutions provided to customers. The ability to lock down the documents to users based on job function and individual need-to-know basis is critical to ensuring that private information remain private, even from a rogue employee.
  • Audit Trails allow for tracking of every action taken in the filing cabinet and should only be available to top level administrators. This allows for overview and control of the documents and random verification that employees are utilizing the cabinet according to internal policy. Audit trails should be un-deletable and unalterable.
  • Backup of the database protects documents from loss in the case of system and server failure. Although systematic backup of all bank systems is recommended, additional backup of documents is also recommended. Strong DMS providers will provide a backup solution as part of an overall document management package.
  • Client Portal: Much safer than email, a client portal allows for secure sharing of documents with clients and vendors through a cloud solution. The clients log in to the portal with an individual username and password.

eFileCabinet Professional Helps Banks Be Compliant

Fortunately, one solution continues to offer these needed tools in a complete package. eFileCabinet Professional Package includes all of the above tools to maintain compliance at an affordable price. Encryption is set at 256-bit, and the automated backup maintains a minimum of 3 backups in 3 separate locations across the United States.


By | 2016-12-15T12:00:18+00:00 July 2nd, 2015|
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