RBS 2014 Annual Report Download - page 120

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RBS – Interim Results 2015
Notes
16. Litigation, investigations and reviews (continued)
In addition, Citizens Bank, N.A. agreed to take certain remedial actions to improve its compliance risk
management systems and to create a comprehensive action plan designed to achieve compliance with the
relevant Consent Order. Restitution plans have been prepared and submitted for approval, and Citizens
Bank, N.A. has submitted for approval and is in the process of implementing its action plan for compliance
with the Consent Order, as well as updated policies, procedures and programmes related to its compliance
risk management systems. In addition to the above, the bank subsidiaries could face further formal
administrative enforcement actions from their federal supervisory agencies, including the assessment of civil
monetary penalties and restitution, relating to issues identified by Citizens arising from other consumer
products and related practices and policies, and they could face potential civil litigation.
Governance and risk management consent order
In July 2011, RBS agreed with the Board of Governors of the Federal Reserve System, the New York State
Banking Department, the Connecticut Department of Banking, and the Illinois Department of Financial and
Professional Regulation to enter into a consent Cease and Desist Order (Governance Order) (which is
publicly available) to address deficiencies related to governance, risk management and compliance systems
and controls in RBS plc and RBS N.V. branches. In the Governance Order, RBS agreed to create the
following written plans or programmes:
● a plan to strengthen board and senior management oversight of the corporate governance,
management, risk management, and operations of RBS’s US operations on an enterprise-wide and
business line basis,
● an enterprise-wide risk management programme for RBS’s US operations,
● a plan to oversee compliance by RBS’s US operations with all applicable US laws, rules, regulations,
and supervisory guidance,
● a Bank Secrecy Act/anti-money laundering compliance programme for the RBS plc and RBS N.V.
branches in the US (the US Branches) on a consolidated basis,
● a plan to improve the US Branches’ compliance with all applicable provisions of the Bank Secrecy Act
and its rules and regulations as well as the requirements of Regulation K of the Federal Reserve,
● a customer due diligence programme designed to ensure reasonably the identification and timely,
accurate, and complete reporting by the US Branches of all known or suspected violations of law o
r
suspicious transactions to law enforcement and supervisory authorities, as required by applicable
suspicious activity reporting laws and regulations, and
● a plan designed to enhance the US Branches’ compliance with Office of Foreign Assets Control
(OFAC) requirements.
The Governance Order identified specific items to be addressed, considered, and included in each proposed
plan or programme. RBS also agreed in the Governance Order to adopt and implement the plans and
programmes after approval by the regulators, to comply fully with the plans and programmes thereafter, and
to submit to the regulators periodic written progress reports regarding compliance with the Governance
Order. RBS has created, submitted, and adopted plans and/or programmes to address each of the areas
identified above. In connection with RBS’s efforts to implement these plans and programmes, it has, among
other things, made investments in technology, hired and trained additional personnel, and revised
compliance, risk management, and other policies and procedures for RBS’s US operations. RBS continues
to test the effectiveness of the remediation efforts it has undertaken to ensure they are sustainable and meet
regulators' expectations. Furthermore, RBS continues to work closely with the regulators in its efforts to fulfil
its obligations under the Governance Order, which will remain in effect until terminated by the regulators.