A recent audit revealed that the bank's personal trust division was failing to determine whether securities being accepted from new trust customers have been reported as lost or stolen. To address the root cause of this problem, what should the compliance officer do FIRST?
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A. B. C. D.D
The compliance officer's first step should be to review the policies and procedures for accepting securities in new personal trust relationships to ensure securities verification. This option (D) is the most appropriate response because it directly addresses the root cause of the problem by evaluating the bank's policies and procedures for accepting securities in new trust relationships. By reviewing these policies, the compliance officer can identify any gaps or weaknesses in the bank's processes and implement corrective measures to ensure that securities are properly verified before being accepted.
Inquiry with the Securities Industry Council (SIC) about all securities noted in the audit (option A) may be a good secondary step to identify specific securities that have been reported as lost or stolen. However, this action does not address the underlying issue of inadequate verification procedures for securities accepted in new trust relationships. Similarly, contacting the bank's primary regulator to determine the best course of action (option B) may be a useful step in addressing the broader issue of compliance with regulatory requirements. However, it may not directly address the root cause of the problem and may take longer to implement.
Retraining all personal trust administrators on the lost and stolen securities requirements (option C) is also not the most appropriate initial step. While training can be an effective tool for improving compliance, it is not a substitute for robust policies and procedures that ensure securities are properly verified before being accepted.
Therefore, the best course of action for the compliance officer is to start by reviewing the policies and procedures for accepting securities in new personal trust relationships to ensure securities verification. This will provide a foundation for improving compliance and help prevent similar issues from occurring in the future.