In these days of ever increasing regulation and legislation, business professionals can often feel as if they are restricted in how they can operate by the perceived lack of ‘commercial flexibility’ shown by the compliance and risk profession. As a compliance professional myself, I believe this perception is often unfounded but that as a profession we need to actively work to be seen as supporters of good business rather than business inhibitors.
Clearly, we all have to operate within the ever increasing web of policies set by regulators, internal policies, and the ‘global’ thresholds imposed by the large financial institutions. Yet despite these many imposed rules, surely there is still scope for personal interpretation, which begs the question: can we as compliance professionals be our own worst enemies by defaulting to standardised solutions rather than dealing with each situation on a case by case basis, in order to explore all possible alternatives?
Let me explain. When looking for a solution to a problem, it is all too simple to look to the internet to search out a supporting argument in the form of a precedent or an opinion from a credible institution.. Why do so many people defer to an explanation provided by a faceless internet author? Well, in addition to providing a quick and simple solution in our frenetic days, it is often driven by the desire to avoid being involved in the ‘blame game’. Rather than being seen to be stopping the business based on their own knowledge or experience in the face of likely pressure it can often be ‘too’ tempting for professionals to defer straight to a ‘group’ policy or an internet interpretation of the legislation in order to pass on responsibility for their decision. The flip side, of course, is that these external sources don’t have the detailed information you do and therefore could well be ‘wrong’ for your circumstances.
Can you blame them? Well, yes, I can; they are selling themselves short. Compliance and risk functions are not there simply to appease regulators; they should be genuinely adding value to their business by applying their expertise to control the quality of new and existing business.
Providing a ‘computer says no’ response will give the originator a perfect defence but will present the recipient with little flexibility in their further interaction with the client and is therefore likely to thwart further approaches for fear of receiving a similar response. Keeping an open mind and being seen to take a different approach to achieving a solution to the problem is likely to allow your business development or relationship management colleagues to ‘add value’ to the client relationship, with thought through responses.
So how is this done? I believe it is through using the old triumvirate of common sense, gut feelings, and applied expertise to provide an appropriate and commercially sensitive solution. By applied expertise, I mean not simply knowing the rules but also their intent, in order to go beyond simply box ticking and instead deliver something of value. For example, proof of identity is only useful if it can assist a law enforcement agent to positively identify an individual. If it can’t pass that test then you ‘know’ that it isn’t going to be good enough. Similarly if you are reviewing an individual’s source of wealth you will know in your ‘gut’ whether it all adds up or if further explanation is required.
In my experience if you use your own experience and develop an appropriate response based on the specific scenario then not only is it likely to be more relevant to the commercial challenge but will create a culture in which business and compliance can work together to allow ‘creativity ‘ to provide further opportunities. When carrying out training I ensure my audience is aware that the practical application of anti-money laundering is all about using common sense and detecting something is wrong through the gut feeling that you can only develop by actually thinking about something, not just running it through somebody else’s checklist.
The solution is simple: remove the shackles of other people’s precedents and you will soon build a relationship with your internal and external clients in which they will be able to understand the process you have followed in order to reach your decision. This will promote a healthier and more effective compliance culture, in turn promoting good business which and allowing your company to add value to new and existing business relationships. This is an absolute must in the highly competitive, regulation based market in which we are forced to operate these days!