From Tick-Box to Pillar of Compliance: Transforming Training

The Common Approach to Financial Institution Training

In building and implementing a compliance program, many financial institutions claim to recognize training as a “Pillar”. A typical approach involves training the board annually, training executives, management, and staff annually, and training new personnel promptly. The training covers BSA, OFAC, the phases of money laundering, terrorist financing, red flags, and reporting requirements. Compliance ensures all personnel receive training, and some training even includes testing. A few employees are supported in obtaining certifications.

This too common tick-box approach is insufficient and fails to demonstrate that training is actually understood and recognized as a “Pillar”.

It’s worth repeating:  This common tick-box approach is insufficient and fails to demonstrate that training is actually understood as a “Pillar”.

Vulnerable Financial Institutions

Financial institutions who employ a tick-box approach to BSA/AML and OFAC compliance training are left vulnerable to money laundering and terrorist financing.  The approach fails to ensure that employees understand their responsibilities and the expectations of them under the compliance program.  It also exposes institutions to potential compliance violations and to regulatory, reputational and market risks.

Rethinking the Training Pillar

Financial institutions should focus on the following to strengthen their BSA/AML and OFAC compliance program:

1. Tailoring and Adaptation of Training: Training should be tailored to the company's business model and inherent risks. Timely periodic updates should address regulatory changes and help to better ensure employee understanding.
2. Key Control Holders outside Compliance: Employees outside compliance, such as those in IT, sales, marketing, customer service, and finance may require specific training related to their roles. Special attention should be given to coaching these employees on BSA/AML and OFAC compliance responsibilities.
3. Certifications for Key Compliance Roles: Provide special training and assist with obtaining and maintaining certifications for BSA/AML and OFAC compliance officers and key staff.
4. Investigative Training: Develop the investigative skills of employees involved in monitoring and evaluating AML, terrorist financing, and fraud alerts.
5. Backup Roles and Cross-Training within Compliance Function: Identify and train backups for key positions to maintain program continuity and ensure operational resilience through cross-training.
6. Regulatory Interactions and Ethics Training: Train staff on interactions with regulators, law enforcement, and independent reviewers. Cover the company’s Code of Ethical Conduct and compliance culture expectations.
7. Participant Feedback: Collect and integrate feedback from participants to improve training materials and exercises. Implement changes based on feedback to enhance the training experience.
8. Timing and Cadence: Effective training programs require careful consideration of timing and frequency. New employees should receive their initial compliance training shortly after joining to establish a solid understanding of BSA/AML and OFAC requirements. Ongoing training should be conducted annually to keep all staff updated on regulatory changes and evolving industry practices. Additionally, any updates to company policies, procedures, or controls should prompt timely, targeted training sessions to ensure swift and accurate implementation. This systematic approach ensures continuous awareness and strict adherence to compliance standards throughout the organization.

Moving Beyond Tick-Box Training

If your training approach has been focused on ticking boxes, reconsider it. Recognize that training is a Pillar of your compliance program befitting of treatment as such. 

Again, this caution is worthy of repetition:  Recognize that training is a Pillar of your compliance program befitting of treatment as such. 

A weak training pillar cannot support an effective, risk-based compliance program. Strengthening training will fortify your BSA/AML and OFAC compliance and better protect your financial institution as well as the communities it serves.

Disclaimer:

This blog post is intended for informational purposes only and does not constitute legal, accounting, or professional services advice. Our team of professionals with expertise in BSA/AML and OFAC compliance uses AI tools like ChatGPT to support our writing process in different ways. Sometimes, AI is used to improve upon a draft we've written, while other times, it's employed to synthesize and combine information from reputable sources, such as FinCEN, FFIEC, CFPB, FATF, and state regulatory bodies, around a concept or idea. In both cases, the final content is shaped and validated by professionals to ensure accuracy, clarity, and alignment with compliance standards. However, since each institution's compliance needs are unique, we recommend seeking advice from qualified experts in legal, accounting, or compliance consulting. The effectiveness of the strategies and practices discussed depends on your institution's specific risk profile and tolerance, so customization is advised.