Scaling resources amid growing financial crime risks

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By Sepideh Behram Rowland, K2 Integrity

Today’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) officers face unique challenges: adapting to changing conditions, decreased staffing, remote work, and the need to scale resources for new opportunities, underscored by COVID-19. For BSA/AML officers, resilience and adaptability are core talents. Particularly at community banks, BSA/AML officers must balance competing interests to support various lines of business while protecting their institutions from financial crimes.

Finding innovative ways to ensure regulatory compliance while simultaneously enabling institutions to pursue new growth opportunities is challenging. How can BSA/AML officers balance multiple needs?

Establish effective communication

One of the key steps is to adapt communications with internal staff and customers. Since the pandemic emerged, many financial institutions have had to shift from in-person interactions to remote work and meetings via videoconferencing platforms. The pandemic has forced many banks to answer a complex set of questions, including:

  • How do we maintain operations during government-imposed lockdowns?
  • How can we conduct our day-to-day business with remote workers?
  • How can we support our communities with Paycheck Protection Program (PPP) loans?
  • How do we manage all these things while complying with BSA/AML requirements?

This change in environment is increasing institutions’ exposure to fraud and other financial crimes. Banks should be diligent in providing training and continuing reminders to employees about the ongoing risks that thrive in environments where communication is limited, including the remote work environment. Better communication in general—and making employees aware of financial crime trends in particular—will help community banks establish a proactive approach to fraud identification as opposed to reactively addressing potential losses.

Assess risk and adjust internal controls

Appropriately defining and implementing internal controls is crucial in maintaining an effective line of defense, particularly when there is a change in products/services (such as PPP loans), geographic location, or customer base that may impact existing compliance frameworks.

When banks begin offering new products and services, it is important for them to apply effective risk assessment and controls. For example, institutions must consider the implications of the new products on existing processes, such as:

  • Account opening documentation and applications
  • Internal procedures
  • Transaction monitoring

Augment resources

Key to maintaining a compliance program is making full use of available resources:

  • Periodically assess the sufficiency of staffing to ensure the staffing model remains appropriate for the institution to meet its regulatory obligations.
  • Cross-train staff and ensure sufficient knowledge of processes should augmentation be necessary to address surges in volume or a need arises to reallocate staffing.
  • Support and plan for staff development and learning to stay abreast of emerging trends and industry developments.

One area where allocating resources to address volume surges can be particularly problematic is transaction monitoring alerts. Banks should explore ways to clear alerts without straining their capacity to attend to other value-driving initiatives.

BSA/AML officers are facing a daunting set of challenges, but there are resources to help. Download K2 Integrity’s guide to get ahead of the curve: “Scaling Resources Amid Growing Risk: A Guide for Community Banks.”


Download the guide here.