A Higher Standard

Recently, a colleague of mine told me of his experience with a now former employer. After multiple investigations of his director, and him taking the extraordinary measure of reporting her to the OCC himself, the institution refused to take accountable action on his and her entire team’s concerns. The person conducting the review, from something called Employee Relations, intimidated interviewees, pressing them for almost prosecutorial level evidence, which they certainly were not in a position to provide.

It was when he turned in his resignation that he began his story. Being a close colleague, I already knew the back story. He not only turned in his resignation to his director, but he also provided a detailed, thoughtful account of his experience to both managing directors. Despite the director’s efforts to shuffle him out quickly (he turned in his equipment the very next day), he was immediately contacted by the same ER person. She arranged a call similar to ones they’d had before, along with a person from Internal Audit, to discuss his concerns expressed to the managing directors. He took the call, and, at the end of the conversation, after an hour and a half of deep detail into the ethical issues he’d encountered with this director, when all the questions had been asked and answered, the ER person said, “Ok, so, you’re resigning now, and we respect that. Can you tell us why you’re leaving?” In the split second between the question and his unfiltered answer, he sat indignant. “What did I just spend the last hour and a half of my time telling you?”, he thought. Before his brain could hit the clutch, his mouth simply said “Her”. He went on to detail how a professional such as himself didn’t need to experience the personal, directed attacks this director provided weekly, likely as retaliation for his speaking out, as quietly as he tried to do so.

But, what confounded my friend even further was the following weeks. He was phoned twice, by the ER person, who’d taken it upon herself to set up conference calls without his knowledge, leaving voicemails telling him they’d “completed their review” of his concerns and wanted to discuss them with him. Given their track record, my friend ignored the calls, seeing nothing of value for him to discuss. He’d left with his head held high, on his own terms, and he planned to keep it that way.

While this story is a bit lengthier than I’d planned, because of its close connection, it highlights a point that I wish to make. Had the ER person, along with IA, addressed the clear, blatant ethical breaches when they were first raised, either time, my friend would be still be with this organization. Unlike many today, he values his integrity over a paycheck. However, the ER person fell victim to what so many do. She had a goal, and sought to achieve it. She’d decided the outcome of the investigations before she began them. (Kinda sounds like politics the past 20 years, and the FBI the past 10, don’t it?)

I recall on my first AML assignment, a subpoena came in for a trust account. Being new to the field, I asked my manager how to approach it. She stated that, since we weren’t told what was being sought after, to “just look through and see if you see anything odd.” I grew up in a town of 11,000 people. A $3 million trust fund was odd on its face. Since I didn’t see anything that I could identify as odd, I was told to write that up briefly, and it was dismissed. Knowing then what I know now, the outcome could have been different. Since then, I’ve seen black market peso exchanges. Since then, I helped a colleague understand REITs to avoid writing a SAR. Since then, I gave an impromptu lesson on fraud to an analyst I QA’d, who thought that a minister in GA suddenly using his credit card to buy thousands of dollars’ worth of liquor in a single weekend in Johannesburg, South Africa had “had a falling out with Jesus”.

Institutions today are trying to do AML on the cheap. This colleague of mine was hired, because the OCC told that business unit they had no one doing AML reviews who’d ever done an AML investigation. Yet, he was marginalized and kept off reviews that would have made use of his background. The director, seeking to save her own face, didn’t want objections to her obvious lack of expertise, and in the process, made her own prideful life harder than it need be.

A lot of projects and roles now say “1-3 years’ experience”, because banks don’t want people with 20+ years’ experience. I’ve known colleagues who have been excluded from full time roles because of extensive consulting backgrounds, being told it “didn’t fit the company’s culture”. When did a diverse background not fit a culture? That company simply didn’t want someone from outside showing them how to do things. I once worked for a bank that told me “we want the OCC to come in and say ‘this is how a compliance program should look’”. Nevermind the director there had 6 months of AML experience, and after I left, the bank was fined, issued a consent order, then fined again for ignoring the consent order.

Institutions continue to fail in their compliance programs, and receive fines for doing so, because they are continually lowering the bar for person’s they hire. They want persons who will do what they’re told, as in the case with HSBC in 2012, when the Senate subcommittee pointed out that their training material “teaches associates to conceal suspicious behavior”. HSBC has since made strides toward a better approach, as I have many close friends there.

The solution is simple. Raise the standard. Anyone at a bank 6 months can get an ACAMS certification. Do they have the experience, the deep experience, to help you solve the issues your compliance program faces? Too many programs today are so segmented that one hand doesn’t know what the other is doing. This needs to change, or the fines will not only continue, but go up. Several overly cumbersome regulations have been repealed, so banks cannot complain they don’t have the financial resources to improve their performance. As in my friend’s example, if his concerns over his director had been addressed sooner, he’d still be with the organization. So too, if you hire experienced people the first time, you won’t end up being fined and paying millions to experienced people to fix it. Think of it like a car. Banks just want to get in and drive, but if, as Miranda Lambert put it, “the axle’s broken and the muffler’s dragging”, you’re not riding far in that little red wagon. Stop promoting from within except when it’s merited on experience. Just because you are a good investigator doesn’t mean you’ll be a good manager. Likely, you’ll be bored and frustrated, and make your team miserable in the process. And, as in the example of my colleague’s former director, just because you were the director of some back office sweatshop part of the bank where no one sees the light of day, ever, doesn’t mean you have the temperament or experience to manage a team of seasoned professionals in the front office.

Hire persons of experience. Hire persons of integrity. I, or any of my colleagues, would be happy to assist you with finding the right persons to fit your needs. Or keep the bar low, keep getting fined, and end up with massive and expensive projects you don’t have the staff for. It’s your call.