Top 10 Risks Community Banks Must Address in 2025: A Critical Blog Series
Introduction
The regulatory landscape for financial services faces uncertainty as the new administration's appointments settle into their new roles and begin establishing regulatory priorities. In the first half of 2025, regulatory enforcement activities remain focused on compliance failures, risk management gaps, and consumer protection violations.
Community banks adopting a "wait and see" strategy do so at the risk of enforcement actions and fines. That's why we are launching this must-read blog series. Each post in the series will break down a critical regulatory risk, explaining why it matters, the consequences of failing to address it, and what your bank can do right now to avoid enforcement actions.
The Regulatory Risks
- BSA/AML & Financial Crimes Compliance – How to avoid enforcement actions for gaps in suspicious activity monitoring, CDD, and beneficial ownership compliance.
- Third-Party & Fintech Partnerships – Why regulators are scrutinizing Community Banks' vendor management and fintech relationships.
- Cybersecurity & Operational Resilience – Strengthening defenses against increasing cyber threats and meeting new incident reporting requirements.
- Fraud Prevention & Internal Controls – Strengthening internal fraud detection and operational risk controls to prevent insider abuse and financial losses.
- Governance, Compliance Management, & Board Oversight – How regulatory expectations for risk governance and board accountability are changing.
- Consumer Compliance & Overdraft Practices – The crackdown on overdraft fees and misleading account terms is accelerating.
- Fair Lending & UDAAP Violations – The latest on redlining, pricing disparities, and deceptive practices that trigger fines.
- Credit Risk & Loan Portfolio Quality – How shifting interest rates and commercial real estate concentration risks draw examiner attention.
- Interest Rate & Liquidity Risk Management – Managing exposure to interest rate fluctuations and ensuring sufficient liquidity to meet unexpected funding needs.
- Deposit Insurance & Consumer Protection Risks – Avoiding missteps in deposit insurance marketing and fintech collaboration disclosures.
Why This Series Matters to Your Bank
Failing to address these risks can lead to fines, enforcement actions, operational disruptions, and reputational damage. Community Banks tend to have more limited compliance budgets and internal resources. Regulatory missteps can strain these resources and jeopardize profitability.
By following this series, you will:
- Stay ahead of regulatory expectations and avoid costly compliance pitfalls.
- Understand how enforcement trends are evolving and what examiners are focusing on.
- Gain practical strategies to strengthen your risk management and compliance framework.
- Position your bank for long-term success by proactively mitigating regulatory threats while controlling compliance costs.
Take Action Now
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Stay tuned for the next edition in our blog series: "BSA/AML & Financial Crimes Compliance."