Although winter looms,predictions for the coming regulatory climate according to oneconsultant show escalating temperatures with little chance ofrelief.

“Right now the regulatory climate is hot and it's been that wayfor a while,” said Pam Perdue, chief compliance strategist forContinuity Control, a New Haven, Conn., financial consultingfirm.

Also Read: Best Practices Amidst Growing Enforcement

The regulatory storm is much broader than community financialinstitutions have faced in the past, Perdue said Wednesday during aContinuity Control webinar, “Enforcement Actions Survey: How toAvoid Being the Next Victim of Increased Regulatory Scrutiny.”

The lightning strike of enforcement actions is affecting a widerrange of issues and institutions, including smaller asset-sizedones that may heretofore have operated successfully on a moreinformal basis. Those days, Perdue said, have passed.

“Regulators from all agencies are showing an increased appetitefor enforcement,” said Perdue, a former regulator with the Federal Reserve. “It can happen to you and will only beprevented if you have a rock-solid compliance process already inplace.”

Based on third-quarter 2013 data, the FDIC showed the greatestspike in activity among regulators, and especially in comparison tothe NCUA, whose activity was limited by comparison. Overall,management issues attracted the largest amount of activity at 30%,but Bank Secrecy Act violations ranked a close second. The thirdquarter saw cease-and-desist orders issued against two creditunions for BSA violations, a move Perdue said was very unusual.

On Aug. 29, North Dade Community Development Federal CreditUnion, located in Miami Gardens, Fla., signed a consent agreementwith NCUA, neither admitting nor denying charges of alleged moneylaundering. The action prohibits the $6 million credit union forhaving any further business with money service bureaus not part ofits field of membership.

On Sept. 24, Bagumbayan Credit Union in Chicago signed a similar consentagreement with the regulator, who found significant issues with thecredit union's management. Specifically, the action barred unpaidand untrained individuals from acting on behalf of the tiny creditunion, which has $75,000 in assets and one employee.

Both cases focus on very small institutions, supporting Perdue'sassertion that size no longer matters, but adherence to formalcompliance procedures does. What's more, all regulators offer fairwarning when something isn't quite right with a financialinstitution's compliance methodology.

“It is never a surprise when an institution gets into troubleand enforcement actions are never sudden,” said Perdue. “In morethan 80% of all cases declining performance is known to aninstitution.”