Certified Regulatory Compliance Manager (CRCM) — Question 311

During a recent compliance examination, regulatory examiners found that the bank was not conducting flood hazard area determinations before closing on construction loans. The compliance professional has reviewed the files and agreed with the examiners' finding. What should be done FIRST?

Answer options

• A. Review the bank's flood policies and procedures to determine where the compliance failure occurred
• B. Conduct a risk assessment of the flood determination requirement on construction loans
• C. Prepare an analysis for bank management explaining the requirement
• D. Review all construction loan files to determine the extent of the problem

Correct answer: A

Explanation

The correct answer is A because reviewing the bank's flood policies and procedures will help identify the root cause of the compliance failure and inform subsequent actions. Options B, C, and D are important but should follow after understanding the existing policies and procedures to ensure that any adjustments made are based on a clear understanding of the compliance failure.