Off-the-peg, box-ticking training programmes that provide online compliance and AML training are similar to old or expired yeast which does not work efficiently once it has become dry or outdated and does not act as intended. Online courses only temporarily raise awareness, there is no emotional connection and having to repeat the same course on an annual basis only proves the validity of the Albert Einstein definition of insanity, says Des Hellicar-Bowman
In my opinion, people learn in different ways and at different speeds. Employees fail to see how their online training relates to their day-to-day work activities. I have lost count of the number of times someone has said “but we don’t see any of that in our business and besides, most of our transactions are under GBP2,000".
Still, though, regulatory compliance and conduct risk remains at the top of the agenda as far as most regulators are concerned, so how can firms train their teams better?
Four years ago the UK's Financial Conduct Authority, the financial services regulator, talked of a firm’s investment in its people as one of its priorities and stated, “Firms should ensure there is appropriate investment in their staff… including in training and effective management information, to allow firms to monitor customer outcomes and take appropriate action where needed.” They are also quoted as saying “Firms should also review at regular intervals the quality and effectiveness of such training.”
Compliance requires continual learning, an annual budget for the team and also a separate budget for the Money Laundering Reporting Officer (MLRO) etc, to gain external knowledge from peers and industry related groups that represent the interest of counter-money laundering and financial crime professionals.
Many businesses give an annual budget to their sales and marketing teams who attend numerous ‘must be seen’ conferences over the course of a year and hope to benefit from a return of investment or the number of generated leads converted to sales. Why then, can we not try a similar approach for the cost benefit analysis with regards to financial crime and compliance training?
Financial regulations are constantly evolving, and it is easy to underestimate the cost of doing business. Another way to look at this is for the regulatory bodies in all countries to enforce compliance teams and the MLRO undertake mandatory continuing professional development (CPD) over a period of 12 months with a minimum of (for example) 40 hours being structured and verified. This would ensure that the individuals maintain, improve and broaden their knowledge and skills within the financial crime environment. It should be part of the department’s annual budget and a firm's annual employment costs.
Des Hellicar-Bowman is an experiene
I am not talking about the International certification associations such as Association of Certified Anti-Money Laundering Specialists (ACAMS) or International Compliance Association ( ICA) as they both have their merits, however in my opinion, certificates and diplomas provide glorified award ceremonies that demonstrate knowledge of the concepts and principles associated with money laundering and compliance but interfere with the students' ability to grasp any new examples or experiences they meet once they apply their learning to the real world of financial crime.
Compliance teams need to develop along a path of constant improvement and have awareness of the financial, commercial and technology reasoning behind their business’s strategy as well as be provided with realistic case studies that help to demonstrate the type of scenarios that the individual may face.
What happens if things do not change? Consider when Captain Chesley Sullenberger safely landed US Airways Flight 1549 on what is known as ‘the miracle on the Hudson River’ in 2009, he was praised as a hero but he didn’t think so. He is quoted as saying “Everything we know in aviation, every rule in the rule book, every procedure we have, we know because someone somewhere died . . . We have purchased at great cost, lessons literally bought with blood that we have to preserve as institutional knowledge and pass on to succeeding generations. We cannot have the moral failure of forgetting these lessons and have to relearn them.”
In stark contrast, financial institutions talk of ‘mistakes’ and ‘lessons learnt’ but still the breaches, fines and reputational damage keep coming. Regulators judge financial institutions by how well they have implemented what they call ‘effective measures to tackle financial crime’ when they should be questioning ‘is the department adequately resourced and empowered to function effectively to tackle financial crime’.
Unfortunately, many compliance professionals are working within small or medium size businesses with less than 20 staff and are not able to separate compliance functions from operational processes and therefore cannot be considered independent if they are checking the very work that they perform.
Having a training budget plan is one way to ensure compliance personnel have the skills and competencies required to ensure that a regulated entity is free from the risks of financial and regulatory penalties.
Des Hellicar Bowman is an experienced board member and financial crime risk and compliance specialist who has held MLRO positions in a range of financial services businesses.
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