Blog post

Balancing Financial Crimes Compliance During Reopening

As the country slowly reopens after its response to the COVID-19 pandemic, many smaller financial institutions may be feeling the overwhelming effects of new rules in place to continue to slow the spread of the coronavirus. Likely, many institutions have seen a soft shutdown of normal services involving physical locations due to the obvious danger of maintaining normal activities within their branches and service centers. To add to the strain on daily operations, many have surely encountered staffing issues, Personal Protective Equipment (PPE) supply shortages, and the overwhelming onslaught of member questions regarding stimulus payments, small business loans, and the like. The coronavirus has affected both members’ health as well as staff; there is no shortage of related situations causing a strain on our communities, and with reopening comes the unknown.

Specific to financial crimes compliance, there have been reports of malicious scams involving various payment networks, as well as social engineering exploits imposed on the general public. The overall theme of many of these fraudulent activities is to play on the emotions of those that are experiencing extreme insecurity and are looking everywhere for assistance, in an attempt to assist them with some sort of prepayment arrangement, or some other expedited access to funds that involve government stimulus payments or unemployment insurance (UI) claims. This is in addition to the workforce shortages that many compliance departments are enduring, forcing many to multitask or put on pause many of the functions for which they were responsible for, in order to assist with various daily operational tasks deemed necessary to business continuity plans.

Now, with what some are calling “The Great Reopening,” your financial institution can be sure to see an uptick in activities that were previously put on pause: cash transactions, business banking, negotiable instrument purchases, and other activities which usually require face-to-face interactions with members and customers. It’s no doubt that criminal enterprise has been struck equally as hard, and the natural expectation is that the pause in activity due to closure will also cause an uptick in conventional suspicious activities. When one puts it all together, balancing the monitoring of new and established criminal typologies, as well as the daily to-do’s, can be a daunting task.

So, how does a compliance professional balance everything given the situation at hand? First, its important to give yourself and your department some grace. Try using this approach to acknowledge that everyone is working hard to get things done and reported in a timely manner and are also balancing everything in their own lives on top of the work that must be done. Adding to this, do not make drastic and blanket changes to the workload, such as auto-closing your red-flag alerts, Currency Transaction Report (CTR) monitoring, or other methods of monitoring using manual and automated systems. Continue to work through your queues and report with as much effectiveness as possible. It may seem obvious to most, but I reiterate the point because when under the stress of balancing all these things, the concept of skipping over work may not be too far off.

Considering a risk-based approach to balancing financial crimes compliance operations can be helpful in protecting your members and customers from crime. Taking a measured effort at distributing the scarce resources and temporarily focusing effort on immediate issues is one way to use a risk-based approach, while acknowledging that the need to catch up and get things done will ultimately come. Every financial institution is dealing with their form of balancing the needs versus the availability of resources, and bank regulators are acknowledging the sudden influx of changes affecting financial institutions, as seen in the following link: One final word: look to your regulator as a partner in this ever-changing situation and reach out to your representative if you have questions on addressing financial crimes or other related issues. Communication between the financial institution and your regulatory agency is key to success.

About the writer

Dave Gowan

Dave brings a unique blend of experience as a former investigator and compliance officer with multi-billion dollar asset financial institutions. Dave has a 15+ years of career experience from the armed forces; to financial crime / fraud investigation; to complete compliance officer responsibilities. Dave brings a pragmatic and practical approach to the industry, grounded in fact and working knowledge of financial regulations. Dave has been with PayLynxs for over 4 years.