PRACTICAL SOLUTIONS
Money
Once you are cited , an investment is required to remediate the issues , so you need to accept that fact . Not only will you have to spend money to address and correct problems identified in the enforcement action , but the institution , as well as individuals , may also face fines and restitution . Get a forecast together and reserve for the worstcase scenario . Make sure that you have the right people providing input . It cannot just be the finance department ’ s job to get a handle on the costs . Do not forget to consider opportunity cost ( the business you did not get and the loans you did not make because you were distracted or restricted by a compliance misstep ). All stakeholders need to be consulted — from the business lines and executive leadership up to and including the board of directors . In addition , regularly refresh your budget .
People
Your institution probably lacks one or more of the appropriate staff , policies , procedures and tools for an effective program . This means that you will need to assess current staff , hire new staff in a highly competitive environment , and purchase and implement the automated tools necessary for your compliance program ( e . g ., antimoney laundering monitoring or Office of Foreign Assets Control sanctions administration ). Not everything will go right either , particularly when you are dealing with data and systems . The board and senior management need to commit sufficient funds to strengthen a system of internal controls to ensure that it is appropriate to the risk profile of the institution . It is important that your institution be proactive in developing and executing a plan in a timely manner . Your monitor or independent consultant will guide you in this process through their independent reviews .
You will need staff who know the law and program elements and staff who know how to execute . Unfortunately , not everyone has every attribute . In fact , more often than not you will find that most staff have one or the other . Execution is key ; it is also where most institutions fail . Make sure you have the right complement of people with these attributes .
Project management is extremely important . There will be many issues to be addressed with far-reaching remediation efforts throughout the company . A project management office needs to be established , surrounding the entire remediation effort . This will help to ensure that the wing-towing remediation efforts of the firm are fully documented with sustainable corrective actions and tracked through closure . In turn , this documentation will provide senior management , the board , regulators and law enforcement with a much higher degree of comfort that you know what you are doing and are on top of every aspect of your program enhancements .
Compliance departments are viewed as cost centers when they should be viewed as revenue guardians
Culture
The board and the CEO must be investing in , committing to , and actively communicating the change in company culture , with a renewed pledge to maintain an effective compliance program and to support the compliance department . The tone from the top must cascade down and around the entire company so that it resonates with every manager and employee . Everyone needs to understand that there is a new culture and that it is here to stay . Enforcement in a consistent manner is equally important . Employees and contractors need to know that violations will be dealt with swiftly and appropriately . Too often culture is overlooked , with institutions merely changing policies , procedures and processes . This approach is a proven misstep , since without a strong culture of compliance , your new policies and procedures may look good , but have little or no effect . There are actually methods to assess culture .
Do not repeat past mistakes
You finally get through the storm , wake up and the sun is shining . The enforcement action has been lifted . Your pulse is racing and you immediately start thinking about how you can cut costs . You begin rationalizing your staff and looking for further efficiencies . Time out . While it is generally a sound business practice to continuously seek efficiencies , do not fall into the trap of cutting costs or staff in a way that undoes all the work you have done to get your enforcement action lifted . You simply cannot go backward and expect that the same thing will not happen again .
Compliance departments are viewed as cost centers when they should be viewed as revenue guardians . Unless you have staff with the experience and tools to manage compliance , your institution is at risk of being sanctioned by any number of regulators and law enforcement agencies , to the detriment of your business . In the end , it is much less expensive to invest and get it right than to get it wrong . Thus , if you are hit with an enforcement action , it is important to recognize the following five points :
1 . Invest — Enforcement actions will cost money . Recognize that the approvers of the remediation are the regulators and the monitors or independent consultants they appoint — not you .
2 . Think long-term — There are no shortcuts . Sustainable programs take time and money .
3 . Partner and fix instead of opposing — Partner with external and internal stakeholders , honestly assess where you are and move to the target state .
4 . Never let a crisis go to waste — Use it to restructure and streamline your people , processes and systems .
5 . Hire the right expertise — Cheap is expensive . Hire the right people with the right tools and experience .
Ross Marrazzo , managing director , Treliant Risk Advisors , New York , NY , USA , rmarrazzo @ treliant . com
ACAMS TODAY | SEPTEMBER – NOVEMBER 2017 | ACAMS . ORG | ACAMSTODAY . ORG 33