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How to Prepare for a Compliance Examination

Department of Financial Institutions examiners regularly visit licensees to examine licensee’s for compliance with state and federal laws. The Department strives to make these examinations as efficient and effective as possible. For years the Department has based examination schedules on a mix of factors including but not limited to; consumer complaints, previous examination findings, annual reporting, findings from other regulators and business volume.

In most cases licensees will receive a “Check Casher/Small Loan Compliance Examination Management Questionnaire” a few weeks prior to a scheduled examination. Fill out the questionnaire as you are instructed. Although the questionnaire may seem cumbersome, completing thoroughly before the examination will save you time during the examination as the examiner will not be interrupting your business as much.

When DFI exam staff arrives at your offices they will want to look over your books and records for compliance with requirements of state and federal laws covering your business activity. Pre-planning to have someone ready to help them access your books and records will expedite the exam process and save you time in the long run. The examiner will want to meet with the manager of the licensed location or other company appointed person to:

• Review your manager’s questionnaire
  
  
• Check that the license is properly displayed in the office
  
  
• Review six months of cash reconcilement statements and bank statements for review
  
  
• Review your compliance with the Payment Plan requirements of the Act
  
  
• Review your compliance with the requirements with the restrictions on loans to military borrowers and their dependents as required by Section 670 of the John Warner National Defense Authorization Act
  
  
• Review of your Anti-Money Laundering Program if you are an MSB
  
  
• Registration with FinCEN if you are an MSB

Be prepared to verify that you maintain a log as required by the Bank Secrecy Act for cash received in aggregate over $3,000 for purchase of money orders.

Be able to demonstrate that you file Cash Transaction Reports to the federal government for customers who purchase checks with cash in aggregate over $10,000.

Make sure you have paid your annual assessments to DFI.

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