In today’s edition of Daily Compliance News:
I recently had the chance to visit with Tina Rampino, Associate Managing Director at K2 Integrity. We chatted about the big picture on culture. We began with the basics: that a culture of Compliance is the foundation of an organization’s compliance program. Rampino said it is a measure of how well employees feel empowered to identify, mitigate, and escalate risk within their institution. An institution’s compliance culture is set by an institution’s Board and Executive Leadership team. Their messaging should be continuously reinforced in an institution’s risk appetite statement, policies, training and enterprise-wide communications. A strong compliance culture should be evident at all levels of the financial institution and across all three lines of defense.
Rampino detailed some key questions to ask, such as “What is the tone that is set from the most senior levels of the organization? Are employees motivated by doing any and all business no matter the risk? Are they empowered to act with integrity and choose the right business that aligns with their compliance culture?” She went on to relate, “Many institutions have built training and communications programs to help employees understand what the “right business means” – reinforcing an institution’s risk appetite statement, incorporating policies and procedures, and training on red flags and high-risk issues.” She concluded, “A culture of compliance should empower employees, not just in the second line of defense but in all areas of the institution – to think about the risks being presented through their customers, transactions, and products and services and how they can do their part in mitigating risk to the institution.”
An effective compliance training program can help to ensure that an institution is regularly addressing new issues and emerging risks. It also helps to ensure that employees have the right knowledge and skills necessary to perform their roles, so they understand the risks within the institution and their business area as well as the consequences of non-compliance. Rampino detailed some of the areas your organization should focus on with the following questions, “Do our training programs match the risks of our institution, and the variety of functions within it?”; “Do our employees have the right experience and training to do their jobs?” and “Are we regularly addressing new issues and ensuring our programs help our teams deal with emerging risks?”
We next turned to some of the key actions senior executives and leaders can take to not simply ‘talk-the-talk’ but also ‘walk-the-walk’ of compliance. Senior executive and leaders are responsible for setting the tone from the top which means setting expectations for the importance of compliance throughout the organization and by modeling behaviors for their employees. Rampino details the seven elements of a culture of compliance.
An institution’s leadership must support all those elements to ensure that employees have what is needed to effectively manage their compliance risk.
We concluded by considering the role both training and communication have in a culture of a compliance program. Interestingly, Rampino said it maybe “the MOST important role because it is a means by which these critical messages are delivered to all employees.” The reason is that a comprehensive compliance training program “not only ensures that employees are aware of their responsibilities, it provides them with detailed information on how they should identify, mitigate, escalate, and report risk.” Moreover, “the most important asset to an institution’s compliance program is truly each and every employee.” Comprehensive and well thought-out training should assist in creating awareness, developing, and refining skills needed to ensure compliance. The training program should reflect the risks within the organization and should evolve as emerging risks are identified.
In terms of an effective communications program, institutions should ensure robust and recurring communication. “One and done” is not an effective way to deliver communications or develop an organizational culture. A robust program issues clear messages in a recurring fashion. Rampino concluded with some key takeaways on communications. First, institutions that want to create a culture of compliance should issue policy alerts and remind staff of changes. Second, information should then be easily accessible and readily available for employees. Finally, town halls, quarterly newsletters, and even short video messages explaining changes can be effective ways to ensure that all staff members understand what they must do to support the institution’s focus on compliance.
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 the series we have broken down corporate culture, compliance training and communications. Topics included 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 this concluding Part 5, I am joined again by Tina Rampino who reviews key operational aspects of training, including budget, delivery and more.
We began with a discussion of one of the most critical issues around compliance training, but one I believe does not get nearly enough discussion in the compliance community, that being the issue of budgeting. During times of economic stress compliance training budgets are often tightened. Rampino believes this approach needs to be avoided. The reason is straight forward, “investing in training and professional development for employees can save money in the long-run, both operationally and when it comes to regulatory requirements. An institution’s greatest asset is their employees and especially when you’re entrusting them to protect your institution from risk.”
This means that if you are providing employees with ongoing training to assist them to continuously refine their knowledge and skills; it will also keep them engaged and incentivized to take compliance more seriously. Moreover, as Rampino noted, “developing and retaining employees is beneficial to financial institutions in the long-run and demonstrates sustainability within the compliance program.” Instead of cutting back on training budgets in general, institutions should assess the training needs as they align with the greatest risk and find ways to deliver the most targeted and relevant training across the enterprise. Rampino advocates several different styles of compliance training. These include, having a “balance of online/in-person training; including independent or self-guided training; as well as hands on training with an instructor.”
We then turned to the concept of compliance training as a cost saving exercise. Rampino reiterated that “skilled and experienced employees are a critical part of a sustainable and effective program. While training may not be the highest priority, when a compliance officer is looking at their list of money spend for year; training is critical in proactively reducing compliance errors and risk.” Additionally, employees who receive timely and engaging training often feel that an institution is investing in them and their professional growth, which can lead to less turnover. Rampino concluded, it demonstrates “an institutions appreciates the importance of career pathing and skills development. It is not just for the regulators, but for health and wellbeing of an institution.”
Think about that for a minute; training should also assess the skills needed for each role and provide a career path for employees. Employees want to understand they are growing professionally. Management desires its employees to “understand that people they have in those roles have the right training and are experienced.” Rampino concluded that this means “training is a resource bigger than what it looks like on paper. That’s why budget and resources for training is so important. Training is a way to mitigate risk within the institution—both in terms of real risks that come in the door every day and demonstrating a sustainable way to do so.”
We concluded with Rampino’s thoughts on regulatory expectations around compliance training. She believes, “Regulators are more interested than ever in seeing that an institution is investing in a sustainable, scalable, and dynamic training program. They want to know that an institution understands their risks and that it demonstrates that with the training that is provided to their employees. Regulators are expecting more targeted and role-based training offerings and that the content is evolving as the risks evolve.”
In the vein of my mantra Document, Document, and Document, Rampino also noted that regulators are “more focused than ever on how the financial institution is assessing compliance skills needed for critical roles and demonstrating that their employees meet the skill requirements for the roles that they are in.” This means a potential audit on areas as wide-ranging as “how an institution provides career pathing, professional development, and cross-training opportunities for their employees.” But this is much more than a myopic view of compliance training only as it “ensures sustainability of the program but also allows for flexibility as financial institutions adapt to the changes and may face organizational or structural changes, as many do due to a host of issues ranging from regulatory remediation to right-sizing.”
Training and its attendant skills development have become critical in empowering employees to move into new roles as needs arise and offers growth opportunity which is valuable beyond measure in the current environment that institutions are operating in. She concluded by stating that regulators “want to know that compliance employees not only understand their institutions internal risk, policies/procedures, and escalation processes but also that they are staying current with industry best practices and emerging risks.”
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.
The State Department published a fact sheet of additional sanctions on Russia in regards to the Navalny poisoning situation. The Kitchen summarizes the latest restrictions.
In today’s edition of Daily Compliance News:
In this episode Jonathan Armstrong and Tom Fox are back to discuss issues relating to data privacy, data protection and GDPR. In this episode the always difficult decision of whether to pay or not to pay a ransomware demand.
Some of the questions we consider include:
Resources
Check out the Cordery Compliance, client alert on this topic, click here. For more information on Cordery Compliance, go their website here. Also check out the GDPR Navigator, one of the top resources for GDPR Compliance by clicking here.
I recently had the chance to visit with Koby Bambilia, Managing Director, at K2 Integrity. We discussed skills development and regulatory changes, together with tailored and risked based training. 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.
Skills Development and Meeting Regulatory Needs
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.
Tailored and Risked Based Training
We next turned to why tailored and risked based training is so now critical. Getting ahead of regulators and ensuring your institution has skills-based trainings is critical. But more than this, regulators now want to see specific risk-based training, tailored to individual needs. This approach is not limited to financial institution regulators but the US Department of Justice (DOJ), Securities and Exchange Commission (SEC), FinCEN, Office of Foreign Asset Control (OFAC) also favor this approach. Initially, he noted that an institution cannot have a blanket training without follow-up trainings on specific job functions.
Some of the different needs for different employee classifications include bank tellers, who need to know more about cash transactions and regulatory requirements, such as Currency Transaction Report (CTR) and pouch activities. This is obviously different from private wealth managers. Employees in trade finance departments need to know more than others on sanctions and embargoes. Moving on to third party relationships, correspondent banking departments need to know, for example, the red flags for nested accounts. Private bankers, who are covered under the Foreign Account Tax Compliance Act (FATCA), must be trained on the law so they can be more vigilant and aware for detecting tax evasions.
The key is that each group requires its unique training and since every institution has a different set of risks, institutions should understand that one form of training cannot fit all situations. Tailored training is a key element and, as Bambilia noted, “a universal one, regardless of the institution’s size, risks, and resources. The example of the examiner saying training is like a burger…demonstrates the need to assure proper and tailored training throughout the institution.” The bottom line is that there is no one training model which will fit all your employees.
Training begins, literally at the beginning with the requirement that a compliance professional must know the risk-profile of an organization, where the blind spots may be, and what exposures may emerge. Obviously, the past year during Covid-19 brought new risks in the working from home environment and those risks are changing again as we return to work. Your risk profile would include the types of products and services the institution provides. If you do not have corresponding banking accounts and your bank does not provide banking services to other financial institutions – and in this case corresponding bank related training may not be relevant. Similarly, if you are a financial investment institution and do not deal with cash, you do not need to train on those requirements. Yet as risks change and new threats emerge, it is important to equip your operational teams on the front lines with the skills to manage these changes, which can be triggered either by a new regulation or by a new product or service your institution wants to provide going forward. A compliance professional must continually assess compliance risks. Here Bambilia recommends having regular ongoing communication with the ““field”, don’t just stay at the headquarters and send emails – go visit some of the branches, and some of the departments; you get valuable insights.”
Bambilia concluded that it “may feel like a heavy lift up front, it can pay its dividends – not just from a compliance perspective but also from an angle of operational efficiencies – you are assuring that your operation and IT staff know what to do going forward. If they know what to do – that will save a lot of pain and effort on their side, but also for you as a compliance officer.”
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.
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 the series, we break down corporate culture, compliance training and communications. Topics include 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 4, I am joined by Koby Bambilia to discuss why tailored and risked based training is so critical now.
In this episode we went into the weeds of specific tailored and risk-based training. Getting ahead of regulators and ensuring your institution has skills-based trainings is critical. But more than this, regulators now want to see specific risk-based training, tailored to individual needs. This approach is not limited to financial institution regulators but the US Department of Justice (DOJ), Securities and Exchange Commission (SEC), FinCEN, Office of Foreign Asset Control (OFAC) also favor this approach. I asked Bambilia if he could provide some examples from the world of financial institutions and financial services firms. Initially, he noted that an institution cannot have a blanket training without follow-up trainings on specific job functions.
Some of the different needs for different employee classifications include bank tellers, who need to know more about cash transactions and regulatory requirements, such as Currency Transaction Report (CTR) and pouch activities. This is obviously different from private wealth managers. Employees in trade finance departments need to know more than others on sanctions and embargoes. Moving on to third party relationships, correspondent banking departments need to know, for example, the red flags for nested accounts. Private bankers, who are covered under the Foreign Account Tax Compliance Act (FATCA), must be trained on the law so they can be more vigilant and aware for detecting tax evasions.
The key is that each group requires its unique training and since every institution has a different set of risks, institutions should understand that one form of training cannot fit all situations. Tailored training is a key element and, as Bambilia noted, “a universal one, regardless of the institution’s size, risks, and resources. The example of the examiner saying training is like a burger…demonstrates the need to assure proper and tailored training throughout the institution.” The bottom line is that there is no one training model which will fit all your employees.
Training begins, literally at the beginning with the requirement that a compliance professional must know the risk-profile of an organization, where the blind spots may be, and what exposures may emerge. Obviously, the past year during Covid-19 brought new risks in the working from home environment and those risks are changing again as we return to work. Your risk profile would include the types of products and services the institution provides. If you do not have corresponding banking accounts and your bank does not provide banking services to other financial institutions – and in this case corresponding bank related training may not be relevant. Similarly, if you are a financial investment institution and do not deal with cash, you do not need to train on those requirements. Yet as risks change and new threats emerge, it is important to equip your operational teams on the front lines with the skills to manage these changes, which can be triggered either by a new regulation or by a new product or service your institution wants to provide going forward. A compliance professional must continually assess compliance risks. Here Bambilia recommends having regular ongoing communication with the ““field”, don’t just stay at the headquarters and send emails – go visit some of the branches, and some of the departments; you get valuable insights.”
Bambilia provided a couple of specific examples. In July 2017 FinCEN has announced changes to the CTR form 104, which included some fundamental changes and significant modifications to the CTR batch submissions. The client understood the importance in assuring their relevant staff were in full understanding of the new requirements and asked us to conduct in person training sessions for the relevant departments. Bambilia related, “this pro-active approach gained some priceless credit points at the very next regulatory examination, when examiners asked specifically to review how the Bank dealt with these new regulatory obligations.”
Bambilia pointed to another example, FATCA, a massive regulation imposed mostly on non-US financial institutions and had tremendous impact on almost every aspect at a Bank’s operations. One of the first challenges was how to introduce 500+ pages of new regulation to employees. Some ways Bambilia and his compliance team did so was to create “animated video clips of no more than 120 seconds which jumped into the employee’s screens once a month and while not interfering with their daily work – we got really good feedback on how they made the new regulation more manageable and understandable.”
Bambilia concluded that it “may feel like a heavy lift up front, it can pay its dividends – not just from a compliance perspective but also from an angle of operational efficiencies – you are assuring that your operation and IT staff know what to do going forward. If they know what to do – that will save a lot of pain and effort on their side, but also for you as a compliance officer.”
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.
Are you exasperated or what? In this podcast series, co-hosts Thomas Fox and Gregg Greenberg, author of F*cking Argentina explores the current American psyche of being overworked, over-leveraged, overtired, and overwhelmed. Find out about modern America’s exasperation with well…exasperation.
Meet the character of Mitchell Weinberger, a divorced father who suffers through small talk with overbearing parents at his child’s back-to-school gathering. You can very well relate to his frustration and other clever and chuckles-filled tales of our collective exhaustion.
We are serving you some humor and fun in this episode of F*cking Argentina with Tom Fox and Gregg Greenberg.
ABOUT THE BOOK
F*cking Argentina and 10 More Tales of Exasperation by Gregg Greenberg is a compilation of short stories that dive into the American phenomenon of being in a near-perpetual state of aggravation. Greenberg’s anthology brings together eleven original pieces of work, each with their own slice of independent and distinct plot lines but all converging on the universal theme of exasperation. They run the whole gamut of scenarios, from the titular story “F*cking Argentina” wherein the country is once again in bankruptcy and a polite game of tug o’ war plays out on a porch, to “A Journeyman Tennis player’s Prayer” with a low ranking U.S. Open contender begging God for a comparable opponent. Both stories end with the superlative f-word, which showcases at some point in other stories, and a guaranteed chuckle from their readers. Buy the book here: http://fckingargentina.com/.
In this episode, The Kitchen reviews OFAC’s settlement with NewTek, Inc. over apparent violations of Iran sanctions.
