As the year winds down, banks, credit unions, and fintechs face one of the most important periods in the compliance cycle: the year-end review. Regulators, auditors, and partner banks rely heavily on annual updates to assess an institution’s overall compliance program health – and gaps left unaddressed now can become findings, exam issues, or partner bank escalations in the new year.
The final months of the year offer a critical opportunity to take stock of your Compliance Management System (CMS), validate that programs are operating as designed, remediate outstanding issues, and prepare for emerging regulatory expectations heading into 2026. Whether your organization is gearing up for internal audits, partner bank oversight, SOC 2 readiness, or a full regulatory exam, a structured year-end compliance process ensures you enter the new year with a stronger, more resilient, exam-ready foundation.
Compliance Management System (CMS) Review
A strong CMS is the backbone of an organization’s ability to remain exam-ready, maintain partner bank trust, and keep pace with evolving regulatory expectations. Year-end is the ideal time to validate that your CMS is fully aligned, documented, and functioning as intended. The following areas should be reviewed and refreshed before entering the new year.
Policies & Procedures
- Confirm all policies and procedures have been reviewed within their required cadence and updated to reflect evolving regulatory guidance, operational changes, and partner bank expectations.
- Ensure version control is maintained, with clearly documented approval dates and responsible owners.
- Validate that policy updates align across the organization (e.g., BSA/AML vs. IT/IS vs. deposit/lending vs. privacy documents).
Governance & Oversight
- Review the structure and effectiveness of governance committees, including the Compliance Committee, Board of Directors, and any risk oversight groups.
- Ensure meeting minutes, agendas, and action items are complete and stored appropriately.
- Confirm annual board reporting is finished or scheduled, including updates on compliance performance, risks, findings, and remediation progress.
- Validate escalation pathways and reporting lines to ensure they remain appropriate for the organization’s size, risk, and structure.
Compliance Monitoring & Testing
- Verify that all planned 2025 monitoring and testing activities have been completed and documented.
- Identify any outstanding testing gaps and schedule these prior to year-end or incorporate them into the 2026 monitoring plan.
- Confirm that remediation work for previously identified issues is thoroughly documented and closed or actively tracked.
- Assess whether monitoring coverage remains aligned with the organization’s risk profile, especially if new products, vendors, or operational changes were introduced during the year.
Compliance Monitoring & Testing
Ensure that all risk assessments have been completed or updated as required, including:
- BSA/AML/OFAC
- Enterprise-wide risk assessment
- Privacy/GLBA
- Fair Lending
- Information Security
- Vendor Management
- UDAAP
Validate scoring methodology, inherent vs. residual risk, and supporting evidence.
Training Programs
- Confirm completion of annual regulatory training for all employees.
- Review role-specific training for BSA/AML, fraud, lending, marketing, IT/IS, and customer-facing roles.
- Ensure tracking logs are complete, including dates, attendance, and testing scores.
- Assess training content for relevance and update needs heading into 2026.
Complaint Handling & Trend Analysis
- Review complaint logs for emerging patterns or potential UDAAP, Reg E, or Fair Lending concerns.
- Validate that responses met required regulatory and partner-bank timelines.
- Confirm escalation procedures are working as intended.
- Verify quarterly or annual trend analysis has been completed and documented.
Key Performance Indicators (KPIs) & Key Risk Indicators (KRIs)
- Evaluate whether KPIs and KRIs accurately reflect operational performance and compliance risk.
- Review thresholds and investigate any indicators trending outside acceptable ranges.
- Determine whether additional indicators are needed for 2026 based on new risks or partner-bank expectations.
Product Development & Planning
- Ensure compliance engagement occurred throughout 2025 for any new products, features, or processes.
- Confirm that regulatory reviews, risk assessments, and partner-bank approvals were documented.
- Validate that processes have been implemented as approved and any post-launch testing occurred.
- Review 2026 product plans to ensure compliance is integrated early.
Regulatory Change Management
- Confirm that all regulatory changes released during 2025 were:
- Identified
- Analyzed
- Mapped to affected processes
- Implemented
- Tested
- Documented
- Verify a central log or tracker exists and is up to date.
Issue Management
- Review open issues, audit findings, and monitoring/testing exceptions.
- Validate that corrective actions were completed or are on track with documented timelines.
- Confirm that issue severity ratings and root-cause analysis are clearly defined.
Evaluate whether recurring issues reveal process or control weaknesses needing structural fixes.
BSA/AML & Sanctions Program
Year-end offers a critical opportunity for organizations to assess the effectiveness of their BSA/AML and sanctions program, validate that risk-based controls are functioning as designed, and ensure that all required reviews are documented before entering a new exam cycle. Regulators and partner banks expect a complete, well-supported annual review of the AML program, including updates to the risk assessment, customer risk rating methodologies, transaction monitoring, sanctions controls, and staffing or training needs.
BSA/AML & OFAC Risk Assessment
- Ensure the annual BSA/AML/OFAC risk assessment is completed, approved, and reflects the current business model, products, delivery channels, geographies, vendors, and customer base.
- Validate inherent and residual risk ratings, scoring methodologies, and documented rationale.
- Confirm all system changes, product launches, or operational shifts in 2025 are reflected.
Customer Due Diligence (CDD) & Enhanced Due Diligence (EDD)
- Review onboarding processes to ensure CIP/KYC documentation is complete, consistent, and properly retained.
- Validate risk-rating methodologies and ensure high-risk customers have undergone required EDD and periodic reviews.
- Confirm that high-risk customer files include source of funds, expected activity profiles, and supporting documentation.
Transaction Monitoring & Fraud Monitoring
- Review alert volumes, caseload distribution, and case quality to identify spikes, backlogs, or staffing concerns.
- Ensure suspicious patterns identified during the year were addressed with rule tuning, thresholds, or additional controls.
- Validate audit logs, investigator notes, evidence retention, and closure documentation.
- Confirm that fraud alerts are being monitored as documented and that escalation paths are followed consistently.
Suspicious Activity Reports (SARs) & Unusual Activity Reports (UARs)
- Ensure SAR/UAR filings met regulatory or partner-bank timelines throughout the year.
- Review SAR narratives for completeness, clarity, and supporting documentation.
- Conduct a year-end correlation review to determine whether patterns of related activity were missed.
- Validate SAR decisioning logs, case notes, approval workflows, and retention practices.
OFAC & Sanctions Screening
- Confirm screening occurs at the appropriate points in the customer and transaction lifecycle (e.g., onboarding, periodic refresh, transaction execution).
- Review match resolution procedures, escalation chains, and documentation quality.
- Evaluate sanctions vendor performance, including false positives, list update frequency, and system latency.
- Ensure a sanctions-specific risk assessment or section within the BSA/AML risk assessment is up to date.
Model Validation & System Tuning
- Validate that transaction monitoring, sanctions screening, and fraud detection systems have undergone model validation or are scheduled for early 2026.
- Ensure key model components—including segmentation, thresholds, scoring, and false positive/false negative rates—have been reviewed.
- Confirm that rule changes, overrides, and manual adjustments throughout the year were documented.
Consumer Protection & Regulatory Requirements
Consumer protection remains one of the most scrutinized areas for financial institutions and fintechs, with regulators and partner banks expecting clear evidence that organizations have strong controls, fair practices, and transparent customer experiences. Year-end is an ideal time to review consumer-facing operations, evaluate trends, and ensure compliance with key regulatory requirements.
Regulation E – Electronic Fund Transfers
- Review error resolution logs for accuracy, timeliness, and adherence to regulatory timeframes.
- Validate that provisional credits, final determinations, and customer notifications were issued as required.
- Confirm that investigation evidence is complete and retained properly.
- Assess whether additional training or process improvements are needed based on error patterns or repeat issues.
Regulation Z – Truth in Lending
- Review billing error resolution procedures and logs for compliance with required timelines and disclosures.
- Validate accuracy of finance charges, disclosures, and periodic statements.
- Confirm advertising related to credit products complies with Reg Z requirements.
UDAAP – Unfair, Deceptive, or Abusive Acts or Practices
- Conduct a year-end review of advertising, marketing, customer communications, and website language for potential UDAAP risks.
- Confirm UDAAP testing was completed as part of the compliance monitoring plan.
- Review all promotional materials for proper partner bank approval, where applicable.
Fair Lending & Anti-Discrimination Controls
- Review for disparities in underwriting, pricing, declines, and exceptions.
- Evaluate the organization’s marketing and outreach to ensure no prohibited-basis discrimination.
- Validate documentation of adverse action notices, including reasons for denial.
Deposit Compliance
- Validate accuracy and completeness of Truth in Savings (Reg DD) disclosures.
- Confirm funds availability practices follow Reg CC requirements.
- Review overdraft fee practices and disclosures for alignment with regulatory guidance and partner bank expectations.
Marketing & Advertising Compliance
- Ensure all marketing materials—including digital ads, emails, landing pages, in-app messaging, and social content—have undergone documented compliance review.
- Confirm partner bank approval was obtained where required before materials were used.
- Review use of testimonials, endorsements, guarantees, APR claims, and incentive offers for compliance with FTC and CFPB standards.
Privacy, Information Security & Cyber
Protecting consumer data, ensuring operational resilience, and maintaining a robust information security program are core expectations for every financial institution and fintech. Year-end is the ideal time to validate that privacy controls, cybersecurity safeguards, and information security governance practices are operating as designed—and that the organization is prepared to respond to increasing regulatory scrutiny in 2026.
Privacy Program & GLBA Compliance
- Confirm completion of the annual GLBA/Privacy risk assessment, including updates for new vendors, systems, data flows, or product features.
- Validate accuracy of the organization’s NPPI/PII inventory and confirm all data flows are mapped and documented.
- Review privacy notices (e.g., annual GLBA notices, online privacy disclosures, CCPA/CPRA notices where applicable) for accuracy and required consumer rights content.
- Ensure processes to handle data access, deletion, or correction requests are functioning and documented.
Information Security Program (ISP) Review
- Confirm all IT/IS policies were reviewed, updated, and approved during the year, including:
- Access Control
- Encryption & Data Protection
- Vulnerability Management
- System Logging & Monitoring
- Change Management
- Incident Response
- Software Development Life Cycle (SDLC)
- Validate that policies match actual practices and that evidence of compliance is retained.
Access Control Reviews
- Complete the annual or semi-annual access review for all systems containing sensitive data.
- Validate user access rights, separation of duties, and timely removal of access for terminated employees.
- Confirm multi-factor authentication (MFA) is enforced on all critical systems and platforms.
- Review privileged access for administrators and third-party vendors.
System Logging & Monitoring
- Ensure logging is enabled across critical systems and that logs are retained according to policy requirements.
- Validate that security events are monitored and alerts are properly triaged.
- Confirm evidence of periodic log reviews is documented and stored
Vulnerability & Patch Management
- Review results of vulnerability scans, penetration tests, and security assessments completed during the year.
- Confirm critical vulnerabilities were remediated within required timeframes.
- Validate documentation of patching and system updates across the environment.
Incident Response Program
- Confirm the incident response plan was reviewed, approved, and tested via a tabletop exercise during the year.
- Validate that incident records (if any occurred) include documentation of analysis, containment, remediation, and post-incident review.
- Assess whether staffing, escalation paths, communication protocols, or forensic capabilities need to be updated for 2026.
Business Continuity & Disaster Recovery (BCP/DR)
- Ensure the BCP and DR plans were reviewed and updated to reflect organizational or system changes.
- Validate completion of annual BCP/DR testing (tabletop or full test) and documentation of results.
- Review DR capabilities such as backup frequency, failover capacity, and recovery time objectives (RTOs/RPOs).
Third-Party Cyber & Privacy Oversight
- Review cybersecurity posture of critical third-party vendors with access to NPPI/PII or sensitive systems.
- Validate SOC reports, cyber questionnaires, and remediation of identified gaps.
- Confirm data security obligations and breach notification requirements are clearly defined in contracts.
- Assess any vendor-related incidents or near misses for potential risk implications.
Vendor Management Program
A strong Vendor Management Program is essential to ensuring that financial institutions and fintechs maintain safe, sound, and compliant operations—especially as reliance on third-party providers continues to grow. Year-end provides an important opportunity to reassess vendor risk, refresh due diligence, validate oversight activities, and confirm that critical third parties remain aligned with regulatory and partner bank expectations.
Vendor Inventory & Risk Classification
- Confirm that the vendor inventory is complete and reflects all active third parties, including subcontractors or embedded service providers discovered during the year.
- Validate vendor risk classifications (critical, high, moderate, low) using updated criteria and the organization’s current operational environment.
- Ensure new vendors added in 2025 were properly assessed and approved before onboarding.
Vendor Risk Assessment
- Review and update risk assessments for all critical and high-risk vendors, ensuring factors such as data access, operational dependency, geographic exposure, and financial health are considered.
- Confirm that moderate- and low-risk vendors have undergone their required periodic assessments.
- Validate that inherent and residual risks are documented and supported by evidence.
Due Diligence Reviews
- Ensure due diligence has been completed and documented for all critical and high-risk vendors, including:
- SOC 1/SOC 2 reports
- Annual financial statements
- Cybersecurity questionnaires
- Business continuity and disaster recovery plans
- Penetration test and vulnerability reports
- Regulatory compliance attestations (e.g., GLBA, OFAC, PCI, privacy laws)
- Confirm remediation items for any exceptions or findings are tracked and resolved appropriately.
Contract Review & Lifecycle Management
- Validate that contracts with critical and high-risk vendors include required protections such as:
- Data security and confidentiality obligations
- Breach notification timelines
- Right to audit clauses
- Business continuity expectations
- Regulatory compliance obligations
- Review contract expiration dates and renewal timelines to ensure that renegotiations, vendor exits, or alternative sourcing plans are appropriately planned for 2026.
How RADD Can Help
At RADD, we understand that year-end compliance preparation is an opportunity to strengthen your compliance foundation, close gaps before they become exam issues, and enter the new year with clarity and confidence. Our team supports financial institutions and fintechs in building, optimizing, and validating compliance programs that are fully aligned with regulatory expectations and partner bank requirements.
RADD’s specialists work with your teams to:
- Conduct comprehensive year-end reviews of your CMS, BSA/AML program, consumer protection controls, privacy/GLBA compliance, IT/IS safeguards, and vendor management program.
- Refresh or develop risk assessments across BSA/AML, OFAC, Fair Lending, UDAAP, GLBA, Information Security, Vendor Management, and enterprise-wide risk.
- Support monitoring, audit preparation, and remediation, ensuring your testing, evidence, findings, and corrective actions are examiner-ready and well-documented.
- Deliver targeted training and compliance program enhancements to help reinforce a strong culture of compliance heading into the new year.
Whether your organization needs a full year-end compliance review, targeted support in high-risk areas, or strategic planning for 2026, RADD provides the expertise and hands-on guidance to keep your compliance program proactive, effective, and exam-ready.
Conclusion: Enter 2026 Confident, Aligned, and Exam-Ready
Year-end is a strategic opportunity to strengthen your compliance program, reinforce operational resilience, and position your organization for success in the year ahead. By taking time to evaluate your CMS, BSA/AML and sanctions controls, consumer protection obligations, privacy and cybersecurity safeguards, vendor oversight, training programs, and audit readiness, you create a stronger, more unified compliance foundation that supports growth, trust, and regulatory confidence.
Regulators and partner banks expect organizations to demonstrate well-documented, risk-based, and continuously improving programs. The work you complete now determines how prepared you’ll be for partner bank audits, independent reviews, and regulatory examinations throughout 2026.
At RADD, we specialize in helping financial institutions and fintechs build agile, exam-ready compliance programs that withstand scrutiny and evolve with the regulatory landscape. Whether you need a comprehensive year-end compliance review, help closing existing gaps, or support developing your 2026 compliance roadmap, our team is here to assist.
Ready to strengthen your compliance program and enter 2026 with confidence?
Click here to book your session and let’s build a stronger, more resilient compliance framework together.