For financial institutions around the world, attracting and retaining top talent in the compliance team is essential. As regulatory scrutiny has ramped up in recent years and the focus on preventing financial crime and terrorist financing has intensified, the need for banks to employ skilled compliance professionals has become more pressing than ever before.
However, in a competitive market the top compliance talent can be hard to come by. Research published last month by SWIFT, Dow Jones and ACAMS found that having enough properly trained anti-money laundering (AML) staff was a concern for 57 percent of the AML professionals surveyed—up from 36 percent in 2013—and 26 percent of respondents listed this as their top challenge.1 Therefore, banks are having to work harder than ever before to attract confirmed compliance talent from other banks and vendors. At the same time, banks are proactively developing in-house talent to meet their compliance needs.
Against this backdrop, it is important to take all measures necessary to attract, retain and develop top compliance talent. One way in which banks can achieve this is by building a strong compliance culture across the organization.
Why choose compliance?
In the past, the compliance function has not always been seen as the most attractive career opportunity by ambitious candidates. There is a lingering perception that compliance, while necessary to the organization, acts as a hindrance to business development. As such, some talented candidates have preferred to focus their attention on business development opportunities.
However, while today’s more stringent regulatory environment is not without its challenges, it has also highlighted the considerable appeal of a career in compliance. For one thing, compliance is increasingly seen as a noble cause, which speaks to the values of many professionals. Working to prevent the illicit money flows that support terrorist financing, human trafficking, drug dealing and corruption means that people working in this area feel they are making a positive contribution to society and building a better world.
At the same time, compliance is an intellectually demanding discipline, presenting challenges that are likely to appeal to high achievers. Not all compliance roles are the same, but whether an individual is a specialist compliance expert or a general management professional supporting the compliance team, the role of the compliance professional is both challenging and fulfilling.
There is much that will draw top talent to a career in compliance, but in a competitive recruitment climate banks cannot rely on this appeal alone. By tapping into opportunities for innovation and collaboration in this area, banks can build a culture of compliance that will not only achieve cost and efficiency benefits, but also increase the appeal of their organizations for compliance professionals.
Central to building a compliance culture is the adoption of innovative technology. While the prospect of having to comply with regulations may not be appealing in and of itself, organizations that position compliance as an epicenter of innovation and actively pursue new opportunities to drive efficiency, have more to offer candidates than organizations that approach compliance as a tick-box exercise.
There are a number of ways in which compliance professionals can embrace innovation. In order to achieve compliance with the necessary regulations, professionals need to make sure that their processes and policies are effective, and that they meet expectations. With this achieved, compliance staff can then explore innovations that can increase the efficiency of the organization in meeting regulatory requirements. Beyond this, specific regulations may present opportunities for financial institutions to achieve further improvements.
Leveraging the DFS Regulation
Last year’s publication of the New York Department of Financial Service’s new risk-based anti-terrorism and anti-money laundering regulation is an example of how banks can take advantage of regulations in order to achieve further advancements. The regulation requires banks operating in New York to maintain appropriate watchlist filtering and transaction monitoring programs. Banks are also required to carry out regular testing and demonstrate that their programs are both compliant and aligned with the organization’s risk appetite.
Institutions affected by this regulation can simply choose to fulfill the requirements. Alternatively, they can take advantage of the opportunity that the regulation presents to enhance their quality assurance programs and to build a more robust compliance regime, thereby reducing costs and improving the efficiency of their environments.
Embracing Continuous Improvement
The same is true of other regulatory requirements. Throughout the compliance discipline, there are opportunities to embrace innovation and to adopt a mindset of continuous improvement.
For example, sanctions screening involves checking transactions for names that appear on regulators’ sanctions lists. To achieve this, banks have to refine the parameters of their sanctions screening filters to make sure that they identify illicit transactions, even if names do not appear exactly as they do on the sanctions list.
Inevitably, this will generate many false positives. Banks can address this by adopting a continuous improvement mindset in order to increase the efficiency of their systems without compromising their effectiveness. This approach can reduce costs, thereby benefiting the organization as a whole while also making compliance roles more attractive to potential candidates.
Adopting New Technologies
By the same token, talented professionals will be attracted by opportunities to take advantage of new and emerging technologies. As banks work to improve the effectiveness and efficiency of their processes, they are exploring the use of artificial intelligence, robotics and machine learning to tackle financial crime. For instance, in the area of sanctions screening, banks might use robotics to identify and close false positives automatically by sourcing information that proves an alert is not relevant.
Where talent is concerned, being exposed to cutting-edge technologies is an attractive part of the job
Where talent is concerned, being exposed to cutting-edge technologies is an attractive part of the job. Many of these developments are being driven by Fintech and Regtech companies, providing an interesting learning experience for compliance professionals. Such developments also free up people’s time, enabling them to focus their intellectual powers on the cases that need the most advanced analysis, rather than spending time on false positives that can easily be dismissed with supplementary information.
“Easier access to information means that compliance professionals won’t have to spend their days chasing customers or filling out forms, removing an element of repetition and ‘grinding’ from the job,” comments Mark Brotherton, director of fraud and financial crime at Lloyds Bank Commercial Banking. “Instead, these workers will be able to focus their energy on tasks that require more critical thinking, such as building relationships and educating customers and banking partners. Plus, more interesting work helps to attract young talent and to retain high performing staff.”
The focus on innovation makes compliance an exciting place to be, but beyond this, the collaborative nature of the job provides further opportunities for professionals to grow their networks while enhancing their skills and reputation.
For one thing, internal collaboration is an important part of the job. In order to achieve the necessary level of compliance, professionals working in this area need to engage with colleagues across all divisions of the organization, from operations to sales.
Rather than imposing requirements on their colleagues, compliance professionals will need to develop interpersonal skills in order to secure their cooperation.
Furthermore, compliance professionals have the opportunity to interact extensively with their peers across the industry. Financial crime compliance is a non-competitive area: financial institutions do not as a rule win market share by being more compliant than their competitors. As such, banks are generally willing to talk to each other and share information to the extent possible within privacy constraints. Compliance utilities are being developed to facilitate information sharing, drive process standardization and increase transparency across the industry.
That said, banks’ ability and willingness to share information can vary depending on their geographical footprints. While some countries have a national framework in place allowing for this type of information exchange, less is available at the international level. At the same time, large banks may find it more difficult to share information given the complexity of their legal structures, the broader geographical spread of their activities and the complexity of their legal environments.
Nevertheless, many banks are willing to participate in information sharing in the interests of increasing effectiveness and efficiency across the industry. Industry working groups and forums may provide an opportunity to achieve this, while public/private partnerships are taking this to the next level. Examples include the Australian Transaction Reports and Analysis Centre (AUSTRAC), Australia’s financial intelligence agency which works in partnership with industry and government agencies. Meanwhile, in the U.K., the Joint Money Laundering Intelligence Taskforce (JMLIT) was set up in 2015 to improve intelligence sharing arrangements and to combat high-end money laundering.
By sharing practices, innovation and ideas in this way, compliance professionals can help to tackle financial crime at an industry level. They can also benchmark their institutions against others in the industry in order to identify opportunities for improvement.
In the current market, financial institutions have much to gain by developing a strong compliance culture. As well as mitigating risks and generating cost savings and efficiencies, institutions can also position themselves to attract top compliance talent in an increasingly competitive recruitment market.
Rather than simply focusing on meeting requirements, the individuals who work within a strong compliance culture can enjoy fulfilling and challenging careers. As well as the satisfaction of contributing to the industry-wide fight against financial crime, compliance professionals can leverage cutting-edge technology to drive efficiency within their own organizations. Furthermore, they have the opportunity to build strong networks both within the organization and beyond—potentially contributing to collaborative initiatives that can improve standards and practices across the industry.
- “2017 Global Anti-Money Laundering Survey,” Dow Jones and SWIFT, http://go.dowjones.com/AMLsurvey2017