A superhero is an ordinary individual who, in spite of overwhelming obstacles, finds strength to persevere and endure toward his mission. Being heroic means having an overall allegiance for the betterment of society, having a concern for a moral cause, knowing there is a personal risk and completing objectives without any expectation of rewards or recognition. What better way to describe Bank Secrecy Act/anti-money laundering (BSA/AML) representatives within financial institutions (FIs) who relentlessly spend their day combating financial crimes and terrorism than as unsung heroes.
Without BSA officers providing the financial intelligence for law enforcement, there would be no justice
Several weeks ago, at the Central Pennsylvania AML/BSA/CTF Peer Group, a senior manager at a well-known and respected consulting firm said, “BSA officers, especially those in community banks, are the forgotten heroes in banking organizations…they are heroes for what’s moral and right, for justice, for keeping their communities safe from illicit financial activity that invades the very places we live and work. Without BSA officers providing the financial intelligence for law enforcement, there would be no justice. And who appreciates them? Unfortunately, only AML/BSA officers in similar circumstances.”
It is not uncommon for BSA/AML representatives, especially in smaller FIs, to face limited budgets, multiple responsibilities, inadequate resources and nearly non-existent training opportunities that are cost-effective, practical and valuable. These are constant hurdles every BSA/AML representative must find strength to champion through, especially when the odds are stacked against them.
This article will help save the day by providing BSA/AML representatives a way to increase their power and utilize their strengths by launching two relatively simple initiatives: (1) establishing an effective peer group and (2) facilitating effective meetings that ultimately bring value, awareness, knowledge and reflection while building important partnerships, which is an imperative tool for BSA/AML representatives within community banks and a valuable tool for our non-bank collaborators.
As an industry, our shared vision pulls individuals from multiple origins into a united and parallel effort. We need to use our combined strengths to develop a new paradigm and practice of collaboration that replaces the current silos that have divided BSA/AML representatives, law enforcement, the government and their regulatory agencies, with strong networks of cohesive partnerships working together to create a globally compliant industry aimed at combating money laundering and terrorist financing. What better way to unify those strengths than through a peer group?
Establishing a Successful Peer Group
In the early stages, an individual needs to be responsible for facilitating, moderating and managing the peer group. It is important to have a committed person(s) who will do the legwork required to get this peer group started. This individual should contact like-minded individuals within the industry and determine their interest in being a part of a peer group. In order to have a well-rounded peer group, four main areas should be represented: (1) BSA/AML officers/representatives, (2) local and regional consulting or audit firms who specialize in BSA/AML, (3) law enforcement representatives from both federal and state agencies such as the Internal Revenue Service-Criminal Investigations (IRS-CI), Federal Bureau of Investigations (FBI), Department of Homeland Security (HSI), U.S. Attorney’s Office, Department of Public Safety (DPS), local police departments, etc., and (4) examiners from regulatory agencies such as the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and Federal Reserve Board (FRB). One of the most important items to consider when establishing a peer group is to focus on organizations of similar size. Small- and mid-size institutions have different risk profiles and challenges than larger FIs. Narrowing the peer group by size allows for more relevant discussions and more practical insights for all participants, especially during the roundtable discussions.
Finding appropriate representation can take some time, but this process can be used as an opportunity to network, develop partnerships and gain trust. Fellow BSA/AML officers will have contact information for both local and regional auditing and consulting firms, either from outsourced audit engagements or BSA/AML advisory services. By reaching out to individuals with expertise in BSA/AML and the ability to balance the risk profiles of community banks, your group will gain practical perspectives on emerging hot topics and regulatory changes. The process can then expand to include law enforcement and regulatory agency contacts.
When establishing representation from law enforcement agencies, reach out to the U.S. Attorney’s Office for your local district and request that you be put in touch with the individual responsible for coordinating the suspicious activity report (SAR) working groups. The individual agent responsible for the SAR working group for your district has access to a variety of different state and local agencies and would likely assist in making the initial contact to determine their interest in joining the peer group. A similar process should be followed when establishing regulatory agency contacts; however, begin the process by talking with your current regulator and explain your initiatives. Participation from regulatory agencies will be the most difficult to obtain, but do not let that be a drawback. Attendance and participation from auditing and consulting firms may be able to provide similar strengths as regulatory representation. When all of these groups are involved, the meetings become much more beneficial to all involved.
ACAMS chapters throughout the U.S. are a premier example of an effective peer group and the opportunity for regulators, law enforcement agencies, and AML/BSA representatives to combine perspectives and knowledge to strengthen the AML community. Involvement in your ACAMS chapter becomes a productive and beneficial resource for AML professionals dedicated to combating financial crime.
Facilitating Effective Meetings
Below are some tips for facilitating an effective peer group meeting:
- Establish a consistent meeting location, date and time (such as the last Thursday of each quarter-end). Consistency in these areas helps to develop a larger core of regular attendees. There are several no-cost options to consider when determining a location. Initially the Central Pennsylvania AML/BSA/CTF peer group met quarterly at the local Perkins Restaurant. As the peer group grew in size, the location changed to the local Bankers Association building, which could easily accommodate a larger group.
- Develop an effective and meaningful written agenda that ensures a productive meeting. This will enable attendees to plan ahead and perhaps encourage others to attend the meeting with them. A typical agenda for a community bank peer group should include a discussion on hot topics and industry updates. If the peer group includes BSA/AML auditors or consultants, reach out and inquire if they would be willing to do a presentation on the related topics. From personal experience, consultants are often willing to present, free of charge, as they see the various benefits of providing a presentation. If there is no consulting representation on the committee, try rotating one member per meeting to provide a presentation.
In addition, include a section on law enforcement updates and emerging financial crimes. Let this be an opportunity for law enforcement representatives to speak to the members and address any emerging financial crimes specific to the group’s region, recommendations for SAR narratives that would better assist them, and provide understanding to how they utilize SARs and conduct investigations.
- Hold a roundtable discussion. Typically before a meeting, the facilitator should send out the agenda and ask for members to email questions or topics they would like to discuss during the roundtable. This is an opportunity for members to openly bring forward any questions, practices, or regulatory focus they would like to discuss. Another key topic to discuss among the group is what regulators or auditors have been focusing on during members’ recent audits and examinations. While specifics should not be discussed, it provides valuable insight for others to be better prepared for their examination and offer the opportunity to potentially enhance their programs.
The facilitator of the meeting should take the initiative to start the roundtable discussions and initially encourage members to provide thoughts. The success of the roundtable discussions, especially for the AML representatives, will be dependent on developing trust among the members. As the facilitator, it is important to address the confidentiality and trust that needs to be developed within the group and its dependency on the professional integrity of the members. Each member of the group is bringing a perspective based on their knowledge and experience and their FIs’ AML program, maturation or risk profile. A level of respect needs to be shown among the members as differing viewpoints or levels of knowledge will be evident. The more reciprocity and reflection, the more the members will gain from the discussion. If you have not received questions or topics from members, as the facilitator, personally research emerging hot topics or current challenges your FI faces and let those questions and topics assist in starting the roundtable discussion.
- Incorporate specific training sessions. This can be an extremely valuable component to any peer group. It is amazing to witness the generosity and willingness of well-known and respected subject-matter experts who frequently provide training at national and international conferences to provide training at a peer group meeting for small community banks free of charge. Law enforcement representatives from groups such as the IRS-CI, the FBI, the U.S. Department of Homeland Security (DHS) and the U.S. Attorney’s Office, have been willing to provide specialized training to groups of individuals working for a shared purpose. It is simply a matter of reaching out to the individual and explaining the purpose. For some members of the committee, this may be the only training they receive throughout the year.
- Provide a sign-in sheet and give attendees access to a copy of the agenda and the presentations. For individuals with a very limited training budget, this would be a beneficial tool to provide auditors and examiners to support outside training received as well as to submit to applicable associations for potential Continuing Professional Education (CPE) credits.
Benefits of an Effective Peer Group
The benefits of a peer group become immeasurable, not only to BSA/AML representatives in the community banking industry, but to law enforcement, regulatory agencies and BSA/AML consultants. Each member—no matter the background or discipline represented—is provided the opportunity to collaborate, share knowledge and experiences, network, and understand the challenges each discipline faces. In addition, each of those same members bring different strengths to the group. Effective peer groups provide an opportunity for BSA/AML representatives to receive relevant and cost effective training while gaining a clear understanding of best practices, improve quality of investigations and understand emerging financial crimes and regulatory hot topics. It also gives the BSA/AML representatives the ability to meet and share ideas and tools with others on the front lines. The encouragement received by knowing you are not alone in the fight against financial crime, is as important as the valuable training received.
When law enforcement agencies are invited to the peer group meetings, the opportunity exists to provide recommendations to improve the quality of SAR narratives and investigations. It paves the way to create a standard among local FIs of how the presentation of SAR data is discussed providing law enforcement critical information needed in a constructive format. Law enforcement is able to provide the members increased understanding of how each area functions, issues each agency handles and insight on emerging financial crimes and techniques evolving within your state.
Regulatory agencies and BSA/AML consultants benefit from an effective peer group by obtaining a holistic understanding of the current challenges FIs face. If the challenges communicated from the BSA/AML representatives are systemic, it provides a great opportunity for examiners and auditors to collaborate with BSA/AML representatives and work toward feasible solutions. Working together provides the ability for a more consistent expectation and standardization for both regulatory and audit expectations across like-sized FIs. The connection exists for regulatory agencies and BSA/AML consultants to understand from law enforcement what is most beneficial and tailor the direction and enhance the quality of their recommendations for those utilizing the SAR narratives and data. Regulatory agencies and BSA/AML consultants contribute by bringing expertise and interpretation for key regulatory changes and evolving expectations, viewpoints from several different FIs, best practices and emerging hot topics.
The advantages of combining all three powerful agencies together become infinite and the benefits overlap extending to not only BSA/AML representatives, but to all sectors involved. The synergy sparked when members come together with similar interests and goals is powerful. Each sector will gain knowledge and resources from achieving a core environment of trust with strong working relationships and cohesive partnerships. The diversity exposes each sector to a wealth of knowledge on best practices, challenges and emerging trends. Shared experiences, collective knowledge and expertise, assures members that the ideas discussed are “battle-tested,” and that the advice offered comes from first-hand experience. A powerful peer group harbors an atmosphere of new ideas, fresh perspectives and engaged professionals. Simply stated, there is power in numbers and the benefits of a peer group and combining all of the unsung heroes into one united front will continue to expand as the financial crimes and regulatory obligations evolve at lightning speed.
Effective peer groups symbolize the premise that combined efforts are stronger than individual parts and by combining forces we maximize the impact. As an industry, we should all be working together toward the same goal of fighting financial crime and effective peer groups will assist in achieving this goal.