Navigating Regulatory Uncertainty With a Compliance Management System By Troy Snyder, Brad Birkholz and Ryan Colleran Plante Moran, ICBC Silver Associate Member The regulatory environment for financial institutions is complex and constantly changing. Learn how a robust compliance program coupled with a compliance management system ticks all the boxes to maintain integrity and adaptability in the face of uncertainty. Rapid changes in the regulatory landscape have created new and unexpected compliance challenges for financial institutions. The issue isn’t missing deadlines or failing to comply — boards and executives are grappling with the complexities of tracking compliance obligations amid ongoing regulatory shifts and adapting their programs in a timely manner. Many of these challenges stem from recent changes in regulatory agencies, including the Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation, the NCUA and Office of the Comptroller of the Currency. A stated theme in these developments has been to reduce bureaucracy and streamline; however, the ensuing restructuring, leadership changes, rescinding of prior guidance and changes in the emphases of regulatory reviews have complicated the compliance journey for financial institutions, leaving many in a state of ambiguity, struggling to decipher compliance obligations and anticipate future requirements. Further complicating matters are legal challenges to major regulations. For example, Section 1071 of the Dodd-Frank Act, which requires financial institutions to collect and report demographic data on small business loan applications, is currently in a state of legal limbo. Although the CFPB finalized its implementing rule in 2023, ongoing lawsuits have resulted in court-ordered delays and ongoing uncertainty regarding enforcement. Similarly, efforts to modernize the Community Reinvestment Act have faced setbacks, with rule changes being rescinded and new proposals under consideration. With institutions caught in a “wait-and-watch” regulatory environment, one thing can be said for certain: Complacency isn’t an option. Now more than ever, engaged leadership is critical to ensure that compliance is a strategic priority as new rules emerge and old ones are rescinded. In this climate of uncertainty, organizations need more than reactive measures — they need a proactive, structured approach to compliance. This is where an effective Compliance Management System (CMS) becomes essential. COMPLIANCE MANAGEMENT SYSTEM FUNDAMENTALS A CMS is a critical framework that institutions use to ensure they operate within legal and regulatory boundaries while upholding internal policies and ethical standards. It provides a structured approach to identifying, managing, monitoring and mitigating compliance risks across all levels of the organization. A well-designed CMS not only helps prevent violations but also fosters a culture of accountability and integrity. At the heart of an effective CMS are two foundational cornerstones: board and management oversight and a robust compliance program. These elements work in tandem to establish clear expectations, allocate responsibilities and ensure ongoing adherence to applicable laws and regulations. Effective board and management oversight begins with setting a strong tone at the top. Visible commitment to compliance sends a clear message throughout the organization that regulatory responsibility is a shared priority. In today’s unpredictable regulatory environment, this leadership is essential not only for accountability but also for agility. When boards and executives are actively engaged, they can help institutions respond quickly to change, allocate resources effectively and ensure that compliance remains integrated into strategic decision-making. A successful compliance program in a rapidly changing environment operationalizes an institution’s commitment to regulatory integrity and translates the oversight into action through policies, procedures, oversight, training, monitoring and reporting back to the board. It involves a combination of tools, business processes and internal controls designed to ensure orderly regulatory compliance and reduce risk, and it enables institutions to adapt quickly, identify emerging risks and maintain consistent standards across business lines. It ensures 12 | INDEPENDENT REPORT
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