Welcome to this special podcast series, Integrity Matters: Culture, Training and Compliance, sponsored by K2 Integrity. This week I visit with Koby Bambilia, Managing Director, and Tina Rampino, Associate Managing Director. Over this series, we are breaking down corporate culture, compliance training and communications by discussing topics such as breaking down the big picture on culture, espresso shots of training, skills development and regulatory changes, tailored and risked based training and operational aspects of training. In Part 3, I am joined by Koby Bambilia to discuss the intersection of meeting compliance skill development and regulatory requirements.

Bambilia has an interesting perspective on compliance training because of his unique background in the field. In addition to being a former compliance professional, he is also a former prosecutor. You do not often see that combination in a person specializing in compliance training.  We started with the basic concept of training – in any regulatory guidance, both here in the US or abroad, which is always considered by the regulators as one of the pillars of Bank Secrecy Act (BSA) compliance program. Obviously the more your staff is trained, the easier your job as a compliance officer will be.

This is where the first line of defense becomes so critical. Who knows clients better than the front-line bank officers who deal with them on a regular basis? This leads Bambilia to note that the role of a compliance professional is to provide the first line of defense with “the appropriate tools so in turn they will to be able to perform their duties; and the method in which you provide such tools are through robust and comprehensive training program.”

Additionally, Bambilia emphasized the regulators’ expectations for skills training. He has increasingly seen that “regulators are looking at the skills and career paths of bank employees. In other words, do the employees in their specific roles have the right set of knowledge, skills, and expertise to carry out their compliance responsibilities?” This has moved beyond strictly “compliance related roles but business-oriented roles as well.” He provided some examples such as private banking, loan officers, tellers, trade finance functions and correspondent banking departments. He stated, “The examiners will sample and check what experience and skills such employees have and what type of training they have received.” This led Bambilia to conclude, “thinking critically about whether the employees in key roles possess the right set of skills and expertise should guide institutions as they develop their training program, especially the long-term ones.”

I asked Bambilia if he could provide an example of such a situation. He recalled one institution where he worked which had more than 13,000 employees. As you might expect, there were multiple training requirements for employees. One of the challenges faced by the compliance function was how to verify all employees had completed the compliance training. Some 93% of employees completed compliance training so the challenge was to reach the remaining 7%. As Bambilia remarked, “We understood that it must be dealt with, and sometimes you have to take drastic measures to demonstrate that you are serious about compliance and serious when it comes addressing the regulatory expectations around compliance training.”

The compliance department went to the Board and proposed that any employee not completing their required compliance training would receive a 33.3% cut of the annual bonus. This stick approach worked and the completion numbers when up to 98%. What about the remaining 2%? They lost 33.3% of their annual discretionary bonus. The result was the next the completion rate for compliance training went up to 100%. But completion rates on employee compliance training are not enough as Bambilia said the regulators also want to see that the “compliance function has the right set of skills needed to perform their respective roles and duties. So, it’s something to think about and be prepared for before your next examination.”

We concluded our discussion by considering if finding solutions for compliance training “workarounds” or lack of employee participation has improved or dropped. Bambilia began by noting a very important aspect of compliance training, “with the right approach employees can be educated that training is not a form of punishment but actually a valuable tool which can help them do their job right. This is critical in keeping institutions “out of trouble.”” As Bambilia further explained, one of the functions of compliance is to “protect the Bank and the clients but it is also there to protect employees. And employees knowing through training what they have to do will keep them safe.”

Bambilia believes that now there are “better systems for e-learning and training solutions to ensure people are actually taking and completing these trainings. These systems can track, check the number of tries for passing the exam and even send the reminders.” Finally, institutions are moving toward more bite sized training (See: Espresso Training Shots). Bambilia explained that this can lead to not an entire day/week course but something that can fit within the regular workday; and this is even more applicable in today’s environment where most of us are working remotely, either in full or in hybrid mode.

K2 Integrity has developed an online training platform and resource center, Dedicated Online Financial Integrity Network (DOLFIN), to help clients with their training requirements and provide more diverse options for training content and modalities. Find out more about DOLFIN here. For more information on K2 Integrity click here.