Regulators Now Demanding New Deposit Reconciliation Practices for Banks & Credit Unions

If you are a financial institution, don’t get glassy-eyed over the new “guidance” recommendations from the Federal Government, a.k.a. best practices for compliance audits of financial institutions.

The new guidance, issued by FDIC, FRB, NCUA, OCC and CFPB, wants “to ensure that financial institutions are aware of the Agencies supervisory expectations regarding customer account deposit reconciliation practices and procedures.”

There is meat behind this new requirement. The Consumer Financial Protection Bureau last year ordered Citizens Bank, N.A. and its holding company, Citizens Financial Group, to pay out $11 million in customer restitution and $20.5 million in federal penalties for allegedly kicking customer funds their own way when there were discrepancies between deposit slips and the total of funds collected by the institution.

One interpretation to this guidance is: “There are too many errors and customers need greater protection from the financial institution.”  I know – – it’s not fair from a bank or credit union perspective as customers are making many of the errors in the first place. Additionally, fraudsters are stressing the system with alterations causing amount differences as well.

“As checks have become more electronified, and as recognition software has helped to automate processes, it appears that regulators are raising the bar in terms of their expectations,” said John Leekley, Founder and CEO of RemoteDepositCapture.com, which recently published an article about the new regulatory focus.

The federal government has done its homework and is aware of solutions like OrboAnywhere™, released earlier this year. OrboAnywhere™ automatically validates the negotiability of paper-originated items for any self-service or traditional channels within the Omnichannel of a financial institution, addressing the balancing and reconciliation processes.

The tech is here, and government regulatory agencies know it – – if you haven’t already, it’s time to evaluate a new era in reconciliation.