New Banking Leader To Focus On Compliance Education

By Eric Kalis
Educating international banks about compliance in a heightened regulatory environment and increasing dialogue with federal regulators are priorities for the Florida International Bankers Association, the association’s new president says.

International bank regulation is much more complex — and fluid — in the post-9/11 banking world, said David Schwartz, senior vice president and manager of international risk mitigation at Regions Bank. With international banking experience in South Florida and Latin America, Mr. Schwartz became association president this month and is to serve in that capacity until next summer.

The association’s international banking members and non-member institutions that do business in South Florida require more training to adapt to a climate in which bankers answer to multiple regulatory bodies, Mr. Schwartz said. Regulatory "programs have been reinforced to the point where we as bankers are now deputized as law-enforcement officials. It is not our background, but pressure comes from the government to be active participants.

"Within FIBA, there is a great need to train members and non-members alike. Every February, we hold an anti-money-laundering conference, and this year we had a sellout with 1,100 participants."

The organization’sAnti-Money Laundering Institute focuses on teaching member banks about licensing and how to navigate a crowded regulatory field, Mr. Schwartz said. "Not only are regulations very complex, they change and are subject to interpretation by various regulators," he said. An international bank’s license "can be registered by the state, the federal government and of course the FDIC (Federal Deposit Insurance Corp.). It is not black and white, so we work closely with regulators to find consistency across the board."

Complying with the portion of the Patriot Act that governs international money-laundering prevention and anti-terrorist financing is arduous for international bankers and significantly affects an institution’s bottom line, Mr. Schwartz said, citing Bank of America’s closing of some of its international banking operations as a recent example of compliance casualties. An industry survey released by the association in 2006 estimates that Patriot Act compliance costs an international bank about $25 million in staffing and puts a proportionately greater financial burden on smaller banks than large institutions.

"Compliance not only brings costs in staffing but also technology," he said. "The Patriot Act requires more monitoring of all transactions coming through the bank, and filtering systems are quite costly. Hardware and software have to be constantly updated."

The association is challenged to come up with a clear strategy to advance its agenda and present that vision to regulators in Washington, Mr. Schwartz said. Having regular correspondence with officials in the nation’s capital will help international banks in Florida fulfill regulatory demands, he said.

"We need to be clear in the issues we identify and the messages we give," Mr. Schwartz said. "Our goal is to continue to work with regulators and authorities on money-laundering. We see ourselves as very active partners" with regulators. Advertisement