In this five-part podcast series, sponsored by K2 Intelligence FIN, we consider defining and building effective compliance programs. I am joined in this series by Michelle Goodsir, a Managing Director at K2 Intelligence, and Gail Fuller, Financial Integrity Network (FIN) Vice President. Michelle has 25 years of financial crime compliance experience which includes fraud risk management, anti-bribery and corruption, corporate security and investigations, sanctions, and Anti-Money Laundering (AML) program experience working within the financial services industry and the US government. Gail focuses on developing, refining, and implementing FIN’s quantitative and qualitative risk rating tools. She leads engagements focused on helping FIN’s jurisdictional and private sector clients understand their exposure to financial crime risk and develop and implement strategies to mitigate their risks.

Over this series we are considering key challenges in compliance, why compliance needs a seat at the table, how to do compliance on a budget; training and culture and what is on the horizon. In Part 3, I visit with Michelle Goodsir on the challenges around budgeting for compliance.

Given the current health crisis and economic dislocation, Goodsir believes it is now “more critical to leverage teams and skillsets for broader compliance purposes”. Whether you call this doing more with less or more fully leveraging the tools you already have, it all moves you towards the same place. She pointed to leveraging AML tools to support an anti-bribery/anti-corruption (ABC) compliance program. Further, as the tools that are regularly used for AML programs involve case management tools, there is also opportunity to customize case management tools to support other types of clients programs and some that may be less operationalized for compliance. This allows a compliance professional to track and document both the steps and the decisions that they’re taking. Goodsir also finds using data to produce different types of metrics reporting can be quite cost-effective. She notes, “those same tools can actually be used as monitoring tools, which is a cost-effective way to implement a monitoring capability”.

Another term is “utility” which is basically using resources leveraged for various types of compliance purposes. From the perspective of financial institutions, it could be as straight-forward as reviewing transactions and filing suspicious activity reports. However, Goodsir noted that it can be expanded around case management, for processing alerts involving sanction screening. Because a lot of the same tools and lists are being used for ABC compliance purposes. Utility teams can also be set up for due diligence purposes. This means, you could have a consolidated team that supports client onboarding, supporting third party due diligence and even vendor due diligence because some of the underlying processes and tools which are used for that type of due diligence are fairly similar.

Goodsir has also seen this be successful in a number of large financial institutions. She has observed smaller ones as well for developing risk assessments where you have a centralized pool of resources that are responsible for developing risk assessment questionnaires, rolling them out to the businesses for completion and also collecting data to support the risk assessment process. She concluded, “there are a number of things that can be done and thinking about how you use your resources a bit differently and maybe thinking about them more broadly than within a particular program silo.”

We then turned to the increasing use of technological solutions in ABC compliance. Goodsir noted that her “experience has been that those compliance programs tend to be less focused on technology and more focused on policy administration and policy guidance.” She believes this has created an opportunity to use more technological tools in ABC compliance such as case management for transactional alert reviews to support an ABC program. This can include documenting escalations submitted to the compliance team around transactional due diligence and potential connected hiring’s. This can lead to more efficient advisory on those types of escalations and more efficient guidance. The use of case management tool for such a strategy can also create a documented audit trail for regulators (i.e., Document, Document, and Document).

Moreover, the legacy information and historical data can be leveraged down the road. Further, Goodsir believes, “some of the tools available in the market for reporting metrics and risk indicators are great tools that can be used for an ABC program and can be a more cost-effective way of doing that.” Goodsir was quick to point out that such tools are not cost-prohibitive as she believes “smaller organizations with less of a global footprint have an advantage when it comes to implementing some of these tools because they can use them more broadly”. Bringing in a case management tool or a screening tool can have the advantage of covering multiple types of compliance risk and screening requirements that are needed to effectively manage risk. This is because smaller entities have “fewer databases, so it is a bit easier to draw the information and data that is needed to feed the screening tools and the processing engines that are used within these financial crime compliance programs.” Goodsir concluded, “in some regard, I think it’s a little bit easier for technology to be leveraged for some of these smaller institutions that it is a broader global one.”

She further noted, “I think it’s an ongoing evangelism actually. I do think that, I do think that people are starting to talk about it and you go to some of the industry conferences for example, and there you’re more likely now to see topics about how do you bring some of these financial crime compliance programs together. What synergies are there between AML and fraud, for example. That was a topic at a conference that I went to just within the last year.”

Goodsir concluded, “I think while people are starting to talk about it in practice, it’s not happening as much as it could. And I think there are a lot of opportunities out there to think more holistically and it really comes down to the managers of those programs. Thinking outside of their program and talking to some of the other managers who are responsible for some of these other financial crime compliance programs and thinking about how some of the tools and capabilities could be more broadly used and stepping back in terms of ownership and thinking more holistically about the good of the organization and the benefit to the organization.”

Join me tomorrow where Gail Fuller joins me to consider ongoing compliance training and culture.


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