How You Should Respond to Compliance Alerts
Compliance is not just a legal requirement — it is a measure of your financial institution’s integrity and resilience. Compliance alerts from your institution’s service providers are sent with the intention of aiding your business in staying legal and trustworthy.
These notifications alert your institution to potential cases of fraud or scams, serving as a critical warning to help your institution keep your borrowers — and your business — secure.
Why Am I Getting a Compliance Alert?
If your financial institution is receiving a compliance alert from your service provider, they are working to warn you of suspicious activity occurring within your clients’ accounts that could qualify as potential violations of the rules and regulations your institution is required to follow. The suspicious activity you are being warned about could indicate:
- Money laundering
- Identity theft
- Fraudulent transactions
- Scams
- And other regulatory violations
If you are receiving a compliance alert, your service provider may have found large or suspicious transactions, unusual spending behavior or patterns, identification that does not match up, sanctions violations, data breaches, or similar scenarios.
The Importance of Responding to Compliance Alerts
Compliance alerts are sent to protect your institution. Responding to them allows your institution to prevent illegal activity from occurring within your accounts and remain aligned with the regulations you are required to follow.
Responding to these compliance alerts doesn’t just protect your institution from compliance issues, it helps your institution avoid:
- Legal drama
- Damage to your reputation
- Penalties
- Mitigate risk
Most of all, these compliance alerts keep your members and your institution safe and secure.
What to Do When You Receive a Compliance Alert
When you receive an alert, acting fast plays a crucial part in protecting your financial institution. Your compliance alert will notify you that there appears to be suspicious activity within specified accounts.
When you receive this alert, you should contact the account owner to inquire about the legitimacy of the transaction. When you receive the member’s answer about whether the activity was fraudulent or not, you should let your service provider know immediately so they can update their records and better understand what fraudulent activity looks like at your financial institution.
If the financial institution rules out fraud, most service providers will continue to monitor the account in case any other suspicious activity occurs. If the financial institution finds that there is fraudulent activity occurring, you and your service provider can take the necessary actions to combat compliance issues in your institution.
In Conclusion
Compliance doesn’t just prevent your financial institution from violating important rules and regulations. It helps your members see that they can trust you. It keeps your institution strong and secure. It helps you build a business of integrity and resilience.
Alerts from your service provider play a significant role in keeping your institution compliant. We cannot emphasize enough just how important responding to these alerts can be. Protect yourself and your valued members with timely responses to compliance alerts.
