How Efficient and Effective is Your Compliance Program?

Broad-based compliance systems and programs are just that — broad. They seem to do everything generically right and specifically “kinda” right. Well, “kinda” does not work well from a compliance perspective. That is why there is no single solution to the ever-changing, dynamic realm of regulations, standards, policy and procedure, risks – the world of compliance management.

One has to drill deep into industries such as Banking and Financial Services (mortgage, loans, investments; functions such as Board of Directors, Senior Managers, Compliance Officers; regulation/standard-specific requirements such as OCC, CFPB or FINRA; and keep track of changes at the corresponding level. And this is were efficiency and effectiveness matters.

Can I do it right?
And can I do it at the most optimal cost?

So let us take a look at something specific — Anti Money Laundering programs (AML). The four pillars are:

1. Designate an official responsible for AML.
2. Implement a system of internal controls.
3. Train appropriate staff.
4. Test the program through an independent authority (within or external to the organization).

Practically every financial institution in the country has implemented an AML program incorporating these four pillars. The impact of the variability in effectiveness and efficiency of a compliance program is depicted below:

To determine the effectiveness, one has to look at AML metrics over a period of time (3, 6 months to a year) and determine trends in the numbers. For example:

• How many 314(a) hits and law enforcement requests did we receive over time?
• How many SARs and CTRs were filed?
• How many open AML compliance positions do we have?
• Number of risk customers by business line?

Efficiency is simply determined by the costs of the AML program for the organization, as compared to peer group benchmark costs.

A comprehensive, automated BSA AML software system built based on industry best practices can result in a highly effective and efficient compliance process (ask me about it).

Remain up-to-date on industry news / updates through our  Twitter & Linkedin profiles.

*All images are property of their respective owners.