Investor's wiki

Compliance Examination

Compliance Examination

What Is a Compliance Examination?

The term compliance examination alludes to the periodic examination of banks to ensure they operate as indicated by consumer protection laws, fair lending statutes, and the Community Reinvestment Act. Compliance examinations are ordinarily centered around operational areas that represent the greatest compliance risks. They explicitly center around management processes and different procedures the institutions have in place to guarantee compliance with regulations.

How Compliance Examinations Work

Banks are financial institutions that take deposits and make loans to their customers. While they are in business to make profits, they are additionally responsible to meet the best interests of their clients. In that capacity, they are regulated to ensure they act in a fair way, don't exploit customers, and don't face unnecessary challenges. One way that the government holds these institutions in check is through oversight activities, like compliance examinations.

These exams are administered by government agencies, for example, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC). As verified over, these exams guarantee that Americans approach a fair and sound banking system.

Examinations generally happen during a supervisory period each 12 to 18 months. They are intended to determine bank management ability, the quality of the bank's assets, and whether banks are consistent with federal regulations. The cycle can likewise ensure that banks are adhering to laws and rules with respect to asset management, electronic recordkeeping, reporting requirements, and meeting the credit necessities of their networks.

Examination Stages

Exams directed by the FDIC generally occur in three distinct stages:

  • The first is the pre-examination planning stage. It requires compliance examiners to collect data from FDIC data sets and records and to contact institutions to request refreshed documents and data. The examiner will request extra documents and data recorded as a hard copy, to survey and distinguish any areas of possible risk.
  • The survey and analysis phase permits the examiner to survey and assess a bank's compliance management system. They document any legal and regulatory infringement regulations (if any) and furthermore document shortcomings in the compliance management system. They do this by dissecting the type, complexity, and level of the establishment's financial operations, which permits the examiner to determine the scope of the examination and convey resources where they are generally required. It likewise permits them to distinguish the risk of potential consumer hurt.
  • The last step includes communication between the examiner and the bank's leadership team. This incorporates making any proposals and getting management to focus on making a corrective move. The discoveries are typically conveyed during an exit meeting.

The FDIC distributes customary updates to its examination processes. As per the agency, generally 98% of banks met their objectives between the time hands on work for examinations start and the time that reports are scattered to management in a year period for the consumer compliance category as of Jan. 31, 2021.


The number of days for an exam turnaround in the consumer compliance category in a year period as of Jan. 31, 2021.

Special Considerations

The compliance examination is one of three types of oversight activities carried out by the FDIC. Different activities incorporate appearances and examinations. Appearances are normally led to survey compliance for recently contracted institutions and to audit the progress on actions taken to address previous infractions. Examinations, then again, can be sent off on the off chance that issues are brought to the consideration of the FDIC, like consumer objections.


  • There are regularly three stages in the exam cycle, including the pre-planning, audit and analysis, and communication stage.
  • The exams center around operational areas that represent the greatest compliance risks, including management processes and different procedures in place to guarantee banks are agreeable with regulations.
  • Exams generally occur each 12 to 18 months.
  • A compliance examination is a periodic survey of banks to ensure they operate as indicated by laws and rules.