The Front Lines – The Investigations Series: The Importance of Leadership in a Compliance Program

My experience working with management chains within multiple companies and industries has a shared characteristic: Multiple managers within the fraud and AML space do not agree to provide uniform advice to their investigators regarding investigations.

In other words, managers tend to operate in their own worlds, dispensing advice based solely on the individual preference of that manager.  

This fails to properly train a wide swath of employees regarding industry best practices and can result in poor and inconsistent investigation conclusions.

For instance, an investigator conducting an AML investigation on a customer who runs a mobile phone kiosk has decided to file a suspicious activity report (SAR) and include in-depth IP addresses of the customer’s mobile banking transactions – describing the rapid movement of cash in and out of the institution.  

The manager applauds and commends this investigator and encourages them to move to a different team that deals in bigger, more complex cases, in an effort to advance the employee’s career – or they move teams of their own accord to work different types of cases, to gain more experience.

The investigator then joins another team within the same institution but is now being told “Law enforcement doesn’t care about tech data,” or “The SAR narratives are too long, they need to be more concise,” or even “We don’t use templates for narratives on this team, just write your case freely.”  

These statements are in direct conflict with the employee’s previous manager.

This can lead to confusion by the employee and severely affect their morale.

The fact of the matter is: While the cases may be slightly different, the foundational work of detecting suspicious activity or discovering fraud and reporting those findings in a detailed, timely and relevant way to law enforcement, remains the same.

Normally most companies operate on the premise of “Well, you’re in a different group now, we do different work, so you need to learn how we do our jobs here.”

The financial industry, however, isn’t “most companies.”

The challenge with Compliance programs in medium to larger financial institutions is that there must be multiple teams conducting similar investigations in tandem, in order to meet the demand of case reviews and adequately analyze and disposition alerts generated by the transaction monitoring system.

The alerts, while created by advanced technologies and, in some cases, artificial intelligence-fueled algorithms from big data bigwigs, still must be weighed and judged by a human analyst or investigator to decide if they can be safely closed or must be turned into a formal investigation and eventual SAR.

True, there are nuances built into each AML team, which leads to the necessity of multiple teams of investigators inside an FI.

As well, we understand that the makeup of teams depending on the area of the bank can be vastly different, particularly when it comes to AML and fraud.

For longtime compliance veterans, they would often joke about the “guns and the geeks,” with many counter-fraud teams stocked with former law enforcement agents, used to kicking down doors, and AML teams, which typically have professionals with a deep well of experience in compliance, regulations, program creation and legal and risk reviews.

In that same vein, we know the calculus of the teams can vary.

A fraud team is not worried about the depth and quality of the SAR, at least initially, because they are worried about saving a customer, or customers, and stopping money from leaving the bank through a scam.

Conversely, AML investigators work in a more forensic manner, working to put all of the pieces together of a potential money laundering scheme and divine the underlying specified unlawful activity (SUA) generating the illicit finance.

Why the very calculated and methodical approach to AML and SARs?

Because those decisions, no matter how harried or stressed the investigator, will be scrutinized and analyzed to death and picked apart by examiners when they come to do the, roughly, annual review of the full AML program.

But even when it comes to purely AML program prongs, there can be a bevy of investigative teams working on distinct areas of financial crime risk.  

For instance, one team could specialize in conducting investigations for retail customers, another team works cases for law enforcement inquiries, another could specialize in suspected terror financing cases, and another could solely focus on alerts for personal accounts.

While the methods used to determine suspicious activity may be slightly different within these teams, the underlying premise remains the same: Detecting and reporting suspicious or fraudulent activity.

Since larger institutions may not require their managers to agree on standard foundational concepts for their investigators, this, while sometimes maddening for the investigator on the ground, could open the door for a true leader to shine.

Merriam-Webster defines a leader as “a powerful person who controls or influences what other people do: a person who leads a group, organization, or country, etc.”

While each manager should have the autonomy to guide their employees as they see fit, coming together as a “leadership collective” could benefit investigators across all teams, helping with morale and gaining a better understanding of the regulatory requirements for institutions.

Having worked in large financial institutions with a global presence, suggesting a cohesive management style across multiple teams in a fraud or AML group can be next to impossible.  

This doesn’t mean that you as a mid-level manager should give up on the idea.  

It may take awhile, but asking your executive leadership to think about requiring a base collection of uniform investigative tactics and basic SAR narrative elements is worth the time.

Some benefits: It would save on employee attrition and you may experience higher case closures, as well as richer and more relevant SAR narratives.

In the meantime, you can be the bridge you are looking for between departments that, while having the same goals, might have different timetables and strategies to reach those goals.  

For instance, if at all possible, establish a rapport with your fellow investigative managers.  

Ask the group if they would be interested in sharing any significant cases with the management team, in an effort to highlight the work of certain investigators.  

This can also give you, the manager, a glimpse into what your FI is seeing regarding trends in alert production, the false positive alert rates, and what types of money movement are moving through your institution.

The more you talk to each other as a “leadership collective,” – i.e., all managers/peers coming together – the better you will become at your job.

As I mentioned earlier, providing guidance to your employees is a right you have as a manager.

A leader will take this a step further and collaborate with their fellow managers to understand what is being taught to investigators on a wider level.

My first AML manager turned out to be a case study in solid leadership.

While we were on opposite sides of the country from one another, he was always available for a chat or a call, to answer my questions.

A trait I noticed with what he did was always ask follow-up questions regarding my investigation.

He would say things like:

“How did you get to that conclusion?”
“What are you seeing on this sheet that would make you suspect a crime may have occurred.”
“Walk me through your thinking.”
While these questions did take time away from his other duties, it also made me feel what I was doing mattered, not only to him, but to the greater mission of detecting suspicious activity.

Taking the time to ask follow-up questions and to thoroughly understand my point of view helped him better formulate his guidance and support.

This helped keep my morale high and attrition rate low.

This is by no means the only thing a fraud or AML manager can do to be a good leader.

Asking questions of your employees regarding how they feel about their current position, what their goals are, and getting to know them as a person can go a long way to making a person feel valued.

I used to start my one-on-one meetings with each of my employees with one simple question: “What are you grateful for today?”

This allows your employee to start your conversation from a place of positivity, to enjoy the good experiences within your interactions, and help lead to stronger relationships among teammates.

More information on the psychology of gratitude can be found here: https://positivepsychology.com/gratitude-happiness-research/

Also, saying the simple two-word phrase that our parents taught us – saying “Thank you” to an employee for doing their job can lead to a happier, more fulfilled employee.

Leaders aren’t born in a vacuum; they are created due to their experiences and interactions with others.

How an employee treats/respects their management chain can help to create a solid leader whom they can rely on.

Here are a few things I learned while working for different mangers/leaders within different companies:

• Communicate, Communicate, Communicate: Tell your managers about any significant cases you may be working on or are having difficulty solving.
• Train, Train, Train: Express your desire for additional external or internal training, in an effort to advance your career. This not only conveys a willingness to learn, but it also shows your management chain that you take this industry seriously and wish to grow professionally.
• Challenge, Challenge, Challenge: Request more difficult cases from your manager when you feel you are ready. This communication benefits you both, allowing the employee to grow in their current role, or realize they may need to be challenged within a different team.
  Leaders and strong investigators can’t thrive without one another.

As we wrap up this year, even the last two tumultuous years we have been through, take the time to ask yourself “What am I grateful for?

How can I support my employees? How can I communicate more effectively?”

Take the time to thank yourself for all the work you have put into leading others and challenging yourself this year.

We here at ACFCS are grateful for all of you. Without you, our members/affiliates/sponsors, we would not exist.

Here’s to an even better 2022.

If you have any suggestions for what you would like The Front Lines to discuss – For the Investigator, by the Investigator – please submit them to thefrontlines@acfcs.org.