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Helping a Bank Achieve Compliance with Proposed CRA Rules

Helping a Bank Achieve Compliance with Proposed CRA Rules

A financial institution faced the complex challenge of aligning its operations with the proposed rule changes to the Community Reinvestment Act (CRA). Leveraging our compliance expertise, we guided the client through a multifaceted approach involving advanced software implementation, proof-of-concept testing and process redesign, positioning them for success despite some regulatory uncertainty.

Challenge

Our banking client sought help to address a significant regulatory shift stemming from the proposed Community Reinvestment Act (CRA) rules. The modernized rules outline more stringent and expansive requirements to how banks evaluate their obligations to low- and moderate-income communities. The bank, regulated by the OCC, needed to transition from manual data management systems to more sophisticated tools while overhauling its compliance processes.

Although not out of compliance with the prior CRA rules, the client sought to proactively adapt to the increased requirements; however, their internal teams lacked the capacity for such a large-scale regulatory transition, leading them to engage SolomonEdwards to help them navigate the changing requirements.

Solution

Our team supported the bank in three key areas:

 

Advanced technology implementation

The client selected a new compliance software to manage community development data more effectively. Transitioning from Excel, this system streamlined data tracking and addressed the expanded data requirements of the updated CRA regulations.

 

Validation testing

To assess readiness, we applied the new rules to historical data, simulating compliance scenarios. This “test drive” provided valuable insights into potential challenges and highlighted areas needing adjustment under the revised framework.

 

Process redesign

Our CRA subject matter experts analyzed the extensive 1,500-page regulation, comparing its requirements with the prior rules. Collaborating with our business analysts, they documented business requirements, redesigned processes, and laid the foundation for implementing new compliance procedures.

 

Our role expanded beyond project management to include a team of CRA experts and business analysts, ensuring that every aspect of the compliance initiative—from interpretation to execution—was meticulously managed.

Outcome

Despite a legal injunction pausing the implementation of the CRA rules and delaying the official compliance deadline to at least 2027, our client decided to proceed with the project. This proactive stance has allowed them to refine their systems and gain a competitive edge in meeting the evolving regulatory requirements with enhanced tools, processes and expertise in place.

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