Retail Banking Fundamentals

What is a Retail Bank?

Retail banking provides everyday financial services to individual consumers and small businesses, including savings accounts, loans, and personal banking services.

What are some examples of services you can get at a retail bank?

Deposits, Payments, Lending, Everyday Banking Services

Types of US Banking Institutions

Commercial, Savings, Credit Unions, Custodial Banks, Industrial Banks, Branches and Subsidiaries of Foreign Banks

Bank vs Credit Union vs Fintech

• Bank: For profit financial institution that offer a wide range of products and services to individuals and businesses

• Credit Union: Not-for-profit financial cooperatives owned by their members, offering many of the same services as banks

• Fintech: Technology-driven companies that deliver financial services, often through digital platforms

FinCen

The Financial Crimes Enforcement Network (FinCEN) is a bureau within the United States Department of the Treasury that collects and analyzes information about financial transactions to combat domestic and international money laundering, terrorist financing, and other financial crimes.

OCC

Office of the Comptroller of the Currency (OCC), Supervise and examine banks for AML compliance

FFIEC

The Federal Financial Institutions Examination Council (FFIEC) is a formal U.S. interagency body established in 1979 to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions.

Provides a common examination framework and AML guidance used by US banking regulators

OFAC

Office of Foreign Assets Control is a division of the U.S. Department of the Treasury that enforces economic and trade sanctions based on U.S. foreign policy and national security objectives.

Who regulates National Banks?

OCC, Federal Reserve, FDIC

Who regulates State-Chartered Banks?

Federal Reserve, FDIC, State Regulators

Who regulates Credit Unions?

NCUA (National Credit Union Administration), State Regulators

Who Regulates savings banks and industrial banks?

FDIC, State Regulators

Who regulates Branches and Subsidiaries of Foreign Banks?

Federal Reserve, OCC, State Regulators

Fundamentals of Financial Crime Compliance (6)

1. KYC/ Customer Due Diligence

2. Transaction Monitoring

3. SAR Reporting

4. Sanctions

5. Investigations

6. FC Risk Management

Transaction types from Checking Accounts (7)

Deposits, Withdrawals, ACH, Cards, Checks, P2P (Person to Person, e.g Zelle), Wires

Common Lending Products (4)

Mortgage Loans, Auto Loans, Personal Loans, Credit Card Lending

What is a Individual Customer?

A natural person who opens and uses accounts for personal banking needs

What is a Business Customer?

A legal entity such as a sole proprietorship, partnership, LLC or corporation that uses banking products and services for business purposes

What is a beneficial owner?

The individuals(s) who ultimately owns or controls a legal entity customer

What does ACH mean?

Automated Clearing House, Electronic transfer between bank and accounts

Why is cash high-risk?

Cash has limited traceability compared with electronic payments- no counterparty data and no digital trail.

What is a tip off for P2P suspicious activity?

Transaction velocity. Rapid, high-frequency P2P activity - especially with multiple counterparties.

What is the payment lifecycle

Authorization → Clearing → Settlement

What data does a bank hold?

Customer Profile, Account Data, Transaction Data, Counterparty Data, Channel & Location, Digital Activity

What’s on a Customer Profile generally? (5)

Personal Information, Identification Documents, Employment & Income, Account Relationship, Risk & Compliance Information

What’s in Account data generally? (5)

Account Details, Account Status, Product & Features, Account Activity, Account Relationships

What’s in transaction data generally? (5)

Transaction Details, Transaction Channel, Counterparty Information, Transaction Location, Additional Information

Customer Digital Activity Info (5)

Device info, Access & login Details, Digital behavior, Location information, security and preferences