Why Trust Companies Must Prioritize Policy and Procedure Reviews
Trust organizations that fail to regularly review and update their compliance frameworks often find themselves playing defense. Without proactive oversight, compliance gaps can go unnoticed until discovered during a regulatory examination. Once these gaps are discovered, the trust organization must jump into action to resolve them quickly and completely.
Consequences of Failing an Audit
Failing an audit has both short-term and long-term consequences for the trust organization.
- Costs of remediation. The trust organization must either commit internal resources to remediation – diverting internal resources away from client services and business development – or invest in an external partner to help resolve compliance gaps. Both options will increase costs.
- Disruptions to operations. Addressing audit findings can require significant changes in processes, workflows, and overall operations. Retraining staff and realigning procedures can decrease efficiency and distract staff from client services.
- Failing to comply with regulations can result in hefty fines from regulatory agencies like FinCEN.
- Reputational damage. Clients and stakeholders quickly lose confidence in institutions that demonstrate weak governance or insufficient compliance oversight. This reputational damage can linger long after any specific compliance issues have been resolved, impacting the trust organization for years. Highly publicized enforcement actions, such as the case against Kingdom Trust, live online forever.
- Heightened oversight. A failed audit can trigger increased scrutiny from regulatory bodies, including more frequent and thorough audits, until the regulatory bodies are convinced the trust organization will maintain compliance.
The Strategic Value of External Compliance Expertise and a Proactive Approach
While internal compliance teams bring deep familiarity with company operations, they may not always be equipped to identify emerging risks or industry trends or have the expertise to accurately assess compliance gaps. External experts offer a fresh perspective and have the benefit of working across a wide array of regulatory environments, enhancing their ability to identify vulnerabilities quickly.
Pohl Consulting and Training provides trust companies with targeted guidance that accelerates compliance improvements while reducing internal workload.
“Our consultants work collaboratively with internal teams to conduct comprehensive compliance policy reviews that reveal blind spots, recommend practical updates, and align current practices with evolving regulatory expectations,” shared Jamie Schupp, Director, Risk Management & Compliance, Pohl Consulting.
Proactive compliance planning is significantly less expensive and disruptive than post-examination remediation. Engaging with a third-party consultant saves time and money and helps restore regulator confidence by demonstrating a commitment to continuous improvement.
Prepare Before the Next Exam Cycle
A comprehensive compliance policy review for trust companies and trust departments should be a central component of every trust organization’s annual risk management strategy. The ramifications of failing an audit far outweigh the cost of conducting a proactive review.
At Pohl Consulting and Training, we deliver compliance insights that protect trust organizations and their reputations. Contact us today to schedule a review and ensure your compliance program is ready for the next regulatory challenge.
