Reengineering Compliance Strategies as a Counter-Crisis Measure

During the last two decades, the global communities' efforts in the fight against international crime organizations have been exponentially increased as far as property, capital seizure and control are concerned. Unfortunately these efforts have not had the desired effect when it comes to the movement of sources with illegal intentions and financing of criminal activities.

How can it be explained that even though the framework seems to be well structured and the governmental and law enforcement agencies are taking action as a communal force, the amount of capital flowing to the markets has not decreased and international crime organizations continue to drive economies to the point of breakdown by using crime proceeds and unfairly obtained money? The answer is clear: The structural problem that the compliance function has is hidden in the way in which it interacts with the target community and the perceptions that the community has of the regulator and its rules.

Marketing Strategy and Human Behavior

The step forward is to involve a marketing strategy for human behavior modification as far as the compliance function is concerned. Regulators and agents are viewed as a barrier for growth and seen to set limits on the theory of accomplishment.

In this scenario, the business operation sees the compliance regulations as a major obstacle to performing their other functions on a daily basis. The tasks added to some workers and departments are seen as excessive, which creates a natural rejection of the compliance team and its work and goals.

The economic world crisis requires the opening of new markets and the establishment of improved procedures to gain resources without falling into the mistake of accepting crime proceeds that will deteriorate the global financial system and its ability to reflect accurate information about a country or business.

There are two factors that might come into consideration when creating a compliance department or when modifying an existing one. The first is that the economy does not answer to any other paradigms but its own. The second factor is that poor marketing strategies for compliance and sanctions departments represent a major comparative disadvantage.

The structural problem that the compliance function has is hidden in the way in which it interacts with the target community

The first issue is reflected in how law, psychology, marketing and policy development are limited by economic needs while the economy is not bound by the values and structures set by the other sciences or disciplines. This situation has left an economic market that only answers to itself and does not recognize social needs or policies. We have forgotten that economy is no more than a branch of praxeology, which analyzes decision making when facing a situation of shortage of resources.

The second factor of the compliance function having a poor or non-existent marketing strategy when developing policies starts with the name applied to the function and its approach to the people implementing its policies on a daily basis. It would be much more accurate and appealing to rename the function of compliance with a more meaningful label, such as "integrity" or "counter-crime department." This could help change people's behavior as they would be more willing to act to stop criminality than to comply with a particular matter. Humans, especially in moments of crisis, tend to join causes that they consider superior, or which provide them with the feeling of belonging, while rejecting measures that impose more work or add tasks with a non-retributive structure.

In this case, after scanning the framework for compliance, we are approaching the problem from the wrong way. Instead of giving our departments a better appearance to improve perception, we continue improving the rule itself without a change of perception.

As marketing expert Rory Sutherland explained, there is no point in improving the food in a restaurant when the floor is dirty and disgusting smells are present. The food might be of the highest quality, but the perception will not change by improving the food even further, so the approach to the problem must change in order to have effect.1

For policy makers, compliance officers and sanctions departments, reframing their function might have a greater impact in terms of efficiency than focusing on the technical solution for the problem itself. Knowing that it is already well regulated (and must continue evolving); this regulation is being poorly applied due to cultural barriers and a lack of communication with the final user.

A Change in Path

Following this line of thinking, AML specialists need to change from an aggressive imposed path to one in which the team members performing the task believe they are making a difference by taking action against the crime. In the end, every human being has a desire to feel his or her existence makes a difference and even better that he/she is a superhero in the fight against criminality. According to Sutherland, "If your perception is much worse than your reality; why on earth are you trying to change the reality."

Through small changes, the renewal of perspective about the role of sanctions/compliance and CDD becomes achievable, thus transforming the environment of punishment and fear to a more enjoyable sense of importance of the task. In this new view of the compliance function, the present efforts of our regulations mix and interact with local values to produce efficiency.

Samuel P. Huntington understood and uncovered the importance of cultural and behavioral measures and their economic and politic importance by explaining the reconfiguration of the world order in his book Crash of Civilizations, stating that is not possible for a civilization to perform duties when they are against their beliefs or even more, when they do not rely on a set of values that are intrinsic to each culture, estate or country.2

Compliance departments have failed to involve other departments in the risk analysis task

In addition, compliance departments have failed to involve other departments in the risk analysis task by not recognizing their pivotal relation to the compliance matter and by disregarding the importance of other disciplines' knowledge into the complexity of the fight against criminal structures. We need to be part of the creative source of ideas in order to be important as product developers and tasks creators in order to make them user friendly and to create movements by inspiring the people performing the integrity function.

In conclusion, the challenge for this new era is simple but drastic:

  • Compliance needs to involve creativity in the task development and policy creation/implementation;
  • Regulators and trainers must turn their actions to improve perception in the same way they are generating technical approaches to factual problems;
  • Directors and managers need to apply behavior analysis and values scales to policy developments in order to make them user friendly and for the policies to be seen as a cause or campaign people can "be a part of" rather than an inconvenient and worthless task.

The fight against criminality requires all human capabilities and people committed to problem solving, not because they have to but because they are willing to and aware of their role in this universal fight.

Jaime Prieto, CAMS, compliance officer, Grand Duchy of Luxembourg, Luxembourg,

The opinions expressed in this article are those of the author alone, and not of any of the organizations that he represents.


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