In 2020, Goldman Sachs was forced to pay out $2.9 billion for its role in the massive 1MDB corruption scandal. That’s an awful lot of zeroes for a company that should have known better!
In the same year, the Financial Conduct Authority fined the Commerzbank London branch £37.8 million for violations of AML controls. And the Swedish Financial Supervisory Authority penalised the SEB Bank to the tune of $107 million for failing to provide adequate anti-money laundering measures in its Baltic subsidiaries.
Where, one wonders, did these financial giants go so wrong?
The answer is very simple: all these companies had a weak compliance culture. In today’s digital world, it’s not enough to be compliant with AML and KYC strictures. When the rules and regulations change so rapidly, companies need to do more than simply comply. And any company (big or small) that values both its finances and reputation, needs to create – and maintain – a compliance culture that’s robust, resilient, and up-to-the-minute.
Here are 4 practical tips from leading compliance software provider iSPIRAL that will ensure you don’t fall foul of the regulators.
TIP 1: CHECK YOUR GUIDELINES
Corporate governance is the structure of rules, practices, and processes that determine how a company operates and how it aligns the interest of its stakeholders. Codes of conduct, best practices, risk management, and customer acceptance policy all fall under the umbrella of corporate governance, creating – through the principles of accountability, transparency, fairness, and responsibility – the business practices that lead to financial viability.
Without such guidelines, any company is flying blind – subjected to uncountable risks, open to scandals and bankruptcy, and haemorrhaging investors. Worth checking, yes?
TIP 2: KNOW YOUR WHO, WHAT, & WHY
Understanding the ‘what’ of compliance isn’t enough. All staff need to fully comprehend the ‘why’. If your employees don’t understand the reasons for adhering to certain rules, they’re likely to cut corners. And that places your organisation at risk.
Companies with a strong compliance culture invest heavily in training, and value open communication. And since regulators explicitly require all employees to be aware of AML/CFT compliance requirements, it’s worth ensuring that everyone – from the most junior accountant to the CFO – understands why they’re doing what they’re doing.
TIP 3: PRIORITISE YOUR RISKS
Recognising potential risks is merely the first step in the process of mitigation; companies with a strong compliance culture also prioritise threats into high-risk and low-risk categories, assessing the likelihood and severity of violating laws and regulations, and emplacing the right tools and methodologies.
Often the best practice is to have a dedicated AML officer: someone who is not only responsible for designing, implementing, and maintaining the AML programme, but is also in charge of keeping the programme, the staff, and the board members up-to-date at all times.
TIP 4: KEEP UP THE GOOD WORK
If something is worth doing, it’s worth doing well. So even if you already have a strong compliance culture in place, you shouldn’t be resting on your laurels! Companies with great AML programmes repeatedly invest in testing and validation to ensure all systems are A-okay: checking existing processes, adopting new tools, investing in ongoing training, and upgrading the technologies.
Yes, it may seem costly and time-consuming. But at the end of the day, while your less responsible competitors fall by the wayside, you’ll be reaping the rewards of a strong compliance culture.
At iSPIRAL, we’ve helped hundreds of Financial Institutions build an exceptional AML Compliance Culture. Our RegTek+ solution was designed to ensure compliance officers are able to conduct all AML and KYC procedures with ease, thereby safeguarding the company against unnecessary risk from global regulators. Find out how we can help you build a great AML Compliance culture by booking your FREE Demo here!