“Helplessly Hoping?”*

Don’t they say that fact is stranger than fiction? The following would make a great New Yorker cartoon, though it’s a bit too specialized.

A bank line-of-business executive is introduced to another banker. They exchange cards.

Reading the business card, the first executive discovers that the other person is in AML.

“Can I get my card back?,” the line-of-business banker says. “I’ll never need to know you.”

Actually, that’s a real story, not a cartoon.

I heard the story from the AML person in that conversation. By the way, if that line-of-business executive worked for me, he’d be gone by close of business.

I bring up this little story because it illustrates what’s still going on out there.

Culture of compliance or just going through motions?

I just returned from the 23rd Annual West Coast AML Forum, a program dedicated to the proposition that the AML community needs to communicate, cooperate, and coordinate with the private and public sectors.

The program is closed to the press and attendees agree not to publicize the discussions that occurred there. However, I would like to come back to a theme that was discussed but which needs quite a bit of work—the so-called  “culture of compliance.”

Followers of this blog know that I take the government to task for a number of failings in the AML community. However, this time I want to do some much-needed finger pointing at the financial sector.

I’m not pointing at the dedicated men and women in AML who excel at their mission to detect and prevent financial crime. I’m pointing at the boards of directors, lines of business, and those not in Compliance who still fail to heed the call for a proper AML “tone at the top, middle, and throughout an enterprise.”

There is no need to repeat the themes of several enforcement actions that call out poor or inadequate training, lack of resources, or just failed oversight.

What strikes me is that in 2015 we still hear about a board of directors rolling their eyes or checking their phones during a paid outside expert’s presentation on how to improve that institution’s AML/CTF program.

Let me also offer this: Phrases on signature lines of e-mail addresses do not constitute “tone at the top.”

But messaging followed by action can move an entire institution.

So what is the proper response to instilling a true culture of compliance?

Putting words into action

While there has been an August 2014 Advisory by the Financial Crimes Enforcement Network (FinCEN) on ensuring this culture—"Promoting A Culture Of Compliance"—the points made are really common sense—and clearly needed.

Where is your institution’s leadership on the non-revenue side? 

Is the governance structure appropriate for legal, compliance, and risk challenges?

Of course we compliance professionals understand the importance of policies and procedures but how are they communicated throughout the enterprise? Can you measure both implementation and understanding?

Lines of communication are a theme in both the private and public sector. With the goal of a culture supporting compliance, what is the communication strategy at your institution? Do you hear about new laws, regulations, and advisories? If so, how?

And if not, why?

We always discuss the importance of training in AML. So how is it that training gets cut; personnel cannot attend conferences; and FinCEN needs to tell the community to “devote sufficient resources to AML”?

By the way, the government doesn’t get a pass here either. It is probably more the fault of short-sighted legislators who force agencies to cut budgets  and then the first thing to go is training—so ridiculous in this environment.

Other elements of a true culture are disciplinary actions for those that fail to follow policies or worse. It just stands to reason that if there are no consequences for certain errors, no one will work toward improvement. The MoneyGram action I mentioned several posts ago is worth revisiting on this point. 

Driving home the point of AML

FinCEN added to the 2014 advisory that a method to improve culture is to explain throughout an enterprise (large or small) the importance of reporting.  You need to answer “Why do we do all the things that AML requires?”

I sincerely believe that AML is not simply a job but a commitment to improving society. What we do helps to attack such disparate crimes as terrorism, human trafficking, and all forms of moving illicit funds. There are many public reports that describe the value of AML data and reporting.

Summarize, describe, and explain to your peers and colleagues. It will be a needed first step to changing the tone at your firm or institution.

* Crosby, Stills, and Nash 1969

I would urge reading “Can Bankers Behave?” an Atlantic May 2015 article that delves into ethics in banking.