Regulation O Overdraft Provisions | Bank Compliance Officer Responsibilities

B

The answer to this question is A. Identify the related interests of all directors, executive officers, and principal shareholders.

Regulation O is a federal regulation that governs lending practices between a bank and its insiders, such as directors, executive officers, and principal shareholders. The regulation is intended to prevent preferential treatment of insiders and ensure that insiders do not receive more favorable lending terms than the bank's other customers.

In order to comply with Regulation O overdraft provisions, the bank's compliance officer should first identify all directors, executive officers, and principal shareholders who may have a potential interest in the bank's overdraft practices. This includes reviewing the bank's organizational chart, ownership records, and related party transaction reports.

Once the insiders have been identified, the compliance officer should then examine the bank's overdraft reports for a selected time period to ensure that the overdrafts are being granted in compliance with Regulation O. This involves reviewing the bank's policies and procedures related to overdrafts, as well as the documentation supporting the decision to grant the overdraft.

It is also important for the compliance officer to examine the bank's latest report of condition and income to identify any trends or patterns related to the bank's overdraft practices. This can include analyzing the bank's income statement, balance sheet, and other financial statements.

However, neither examining the annual FFIEC-004 reports on indebtedness to correspondent banks nor the bank's latest report of condition and income is directly related to the compliance with Regulation O overdraft provisions. Therefore, options B and D are not the correct answers.