Regulatory scrutiny in the banking industry is evolving as enforcement actions are trending upward. In 2024, four banking industry watchdogs issued 120 enforcement actions — one of them issuing three times as many as in 2023. While the Consumer Financial Protection Bureau’s (CFPB) work is in limbo due to recent actions by the new presidential administration, other regulators — such as the Office of the Comptroller of the Currency (OCC) and the Federal Reserve — continue to enforce banking compliance.
Among the actions against big institutions, TD Bank was fined $3.1 billion by the Department of Justice for conspiracy to launder money. But recent cases prove that even small banks are not exempt from scrutiny. In November 2024, the OCC issued a cease-and-desist order to Clear Fork Bank, a community bank in Albany, Texas, for deficiencies in its anti-money laundering compliance program. The OCC also reached formal agreements with Hiawatha National Bank and the National Bank of Coxsackie over unsafe and unsound practices, including weaknesses in annual credit review processes and loan risk ratings.
Community banks are subject to the same regulatory expectations as larger institutions, despite differences in size and resources. And compliance risk isn’t just about financial operations — it’s also about how you communicate.
Why Communication Compliance Can’t Be Overlooked
Regulators don’t just scrutinize financial transactions; they also assess how banks communicate with customers, particularly in areas like lending and credit approvals. A single misstep in wording — whether in an email, text, or internal note — can be flagged as discriminatory lending or unfair practices, leading to lawsuits, fines, and damaged trust.
For example, English fluency as a loan prerequisite may be considered national origin discrimination under fair lending laws, as the $9 million settlement with Ohio’s Park National Bank over redlining in 2023 showed. If a single phrase in an email, policy document, or customer interaction suggests bias — even unintentionally — it can put your institution on regulators’ radar.
For community banks, where small teams handle multiple responsibilities, every word matters. A seemingly harmless phrase in a loan approval email or customer conversation could be misinterpreted as unfair treatment. Unlike large institutions with vast compliance departments, small banks have less margin for error—and fewer resources to absorb fines or reputational damage.
Are you confident that your institution’s communications wouldn’t be flagged?
The AI Advantage: Catching Issues Before They Become Problems
Here’s the good news: Technology can help catch mistakes before they become costly problems.
AI-driven tools like HarmCheck act as a safeguard, scanning emails in real time to flag potential compliance risks — before they escalate.
Avoid costly legal battles by catching language that could signal unfair lending.
Stay ahead of regulators with proactive monitoring of your communications.
Protect your bank’s reputation by ensuring every interaction builds trust.
Integrate effortlessly — no extra staff, no complicated onboarding, just instant compliance support.
Unlike manual compliance reviews that take time and resources, HarmCheck operates in the background, ensuring compliant communications without slowing down business.
How Compliance Strengthens Trust At Community Banks
When your community bank demonstrates a commitment to compliance, it’s not just regulators who take notice — your customers do, too. A bank that actively works to prevent bias and ensure fair treatment earns loyalty and trust. Customers value fairness. Regulators demand compliance. HarmCheck helps you do both. With the right tools, even the smallest banks can lead with confidence — proving that size doesn’t determine strength and protecting your institution shouldn’t be complicated.
Amanda Nurse is the editorial and operations coordinator at Alphy.
HarmCheck by Alphy is an AI communication compliance solution that detects and flags language that is harmful, unlawful, and unethical in digital communication. Alphy was founded to reduce the risk of litigation from harmful and discriminatory communication while helping employees communicate more effectively. For more information: www.harmcheck.ai