Some might, but your target customer never lies

When things feel disconnected, look to your target customer for answers; they never lie. Often we find ourselves fighting through challenges that don't seem to have much context related to our organization's vision. I can think of no more perfect example than the most recent scrutiny over the Bank Secrecy Act and Anti-Money Laundering programs within financial institutions.

If you are the CEO of a financial institution, you’ve talked about BSA/AML compliance more than you ever thought  possible. It's amazing how 13 plus billion dollars in fines can grab your attention. Up until a few years ago, BSA/AML and strategy were worlds apart, and in many regards still are. But they shouldn't be.

If you're still operating under the assumption that the program you put in place X years ago will continue to sustain you in the current environment, think again. The days of a BSA/AML program that merely shows your efforts to comply with regulations are gone. The increasing fines speak volumes. You need a BSA/AML strategy that aligns with your growth trajectory. Below are three tips to creating a proactive, defensible BSA/AML program.

  1. Demand a Vision - The CEO should require a vision from their CRO and BSA/AML Officer. I often get strange looks when I mention vision and BSA/AML in the same sentence. However, the best BSA/AML Officers have their finger on the pulse. These officers know what topics are on the horizon (i.e. Ultimate Beneficial Ownership), they know where their institution is growing and they have a pretty good idea of what their program will need to look like to meet these two colliding forces.
  2. Demand a Strategy - The CEO should require a 12-month strategy, that if executed, will create the foundation for successfully implementing a 3-year vision. This 12-month strategy should detail the following: programs goals, projects, timelines for completion, resources required and established reporting. This will serve as the road map for how the CRO and BSA/AML officer plan to accomplish their strategy. This will serve as a prerequisite for approving funds to achieve strategic initiatives.
  3. Demand Specialization - Your organization has target customers. Your products, services, branches and technology should be designed to support your target customer. Your BSA/AML program should not consist of generic compliance skills. Demand specialization that aligns with your target customers and mitigates your high-risk customers. This approach also allows you to create a task force that thoroughly reviews all high-risk, non-target customers. In turn, your team will gain the ability to provide unique pricing strategies to customers that require an inordinate amount of compliance.

To say it's risky to rely on the hope that a regulator doesn't throw up a red flag during an audit is an understatement. It’s time to think proactively and create a BSA/AML program that is based on sound strategy - a strategy that draws from your company's vision, includes specialization around your target customers and a systematic approach to assessing non-target customers. Viewing risk through the lens of your target customer will provide the ultimate context to your risk strategy.