When TD Bank pleaded guilty last fall to criminal money-laundering conspiracy charges and agreed to pay $3.09 billion in fines, its board of directors also promised to improve AML staffing.
Not only was the board to ensure that the bank always had an officer in charge of Bank Secrecy Act compliance, but it also needed to make sure TD had enough managers and staff to support the officer and the bank's overall Bank Secrecy Act/anti-money-laundering compliance program.
In the wake of
At Texas Capital Bancshares in Dallas, the Bank Secrecy Act officer and head of financial crimes compliance spoke directly to the board, offering "lessons learned" from TD's situation, according to David Oman, who became Texas Capital's chief risk officer in June.
Texas Capital employs about 300 people across risk and compliance, including a few dozen contractors. Staffing in the anti-money-laundering segment is "very, very stable," in part because the company prioritizes expansive training and career progression opportunities, Oman said.
"My job is so much easier when the CEO says that we need to do it the right way and staff it appropriately and be totally supportive of risk and compliance," Oman told American Banker.
Consultants and other experts who work with banks to fix anti-money-laundering deficiencies, or avoid them in the first place, say that staffing inadequacies are the root cause of banks' compliance failures. Even if the right monitoring systems are in place, having either too few workers or workers who don't have the necessary skills can put banks at risk.
"One of the things I'm seeing is that there isn't the necessary emphasis on staffing until it's mandated," said Kyle Daddio, a managing director at the advisory firm Stout who started his career at the FBI and specializes in financial crime compliance and securities regulation. "And once it's mandated, they may add some staff, but not enough staff."
Consent orders like the
But according to Daddio and his colleague Scott Rosenbaum, who is a director at Stout, such assessments sometimes ignore banks' future products and services and potential acquisitions, and focus instead on banks' asset sizes without considering transaction or alert systems.
Sometimes banks that are forced to remediate after an anti-money-laundering-related consent order quickly bulk up by hiring contractors, especially at the analyst level, Daddio said. That's often a quick fix to staffing inadequacies, but doesn't solve the broader problem, he said.
The banks "clear through what they need to clear through, and when they get back to a business-as-usual environment, they start letting people go," Daddio said.
Lack of training is another problem area, Rosenbaum said. Sometimes banks' staffing levels are appropriate, but there's a gap in knowledge in terms of how to properly use monitoring tools.
"If you don't know why the system is generating an alert for suspicious activity you're supposed to identify, then you don't really know what to do with that alert," Rosenbaum said. "If you don't have people who have experience with the systems, then you're going to run into problems."
At Synovus Financial in Columbus, Georgia, anti-money-laundering personnel complement their onboarding training with on-the-job training by a supervisor, said Shellie Creson, who's been chief risk officer at the $60 billion-asset company since 2022. They also get paired with a peer mentor, so they can ask "dumb questions" to someone other than their supervisors, she said.
Creson oversees a team of about 335 people, including Bank Secrecy Act/anti-money-laundering personnel.
Following TD's consent order and others that arose throughout 2024, Synovus' risk and compliance department went through an internal dissection, Creson said. Besides TD,
"We took every single one of those [consent orders] and we digested them and said, 'Could it happen here, and what can we learn from this?'" Creson said. "We didn't think we had any problems, but we take it very seriously."
Banks such as TD, Wells Fargo and Bank of America drew attention this year for money-laundering issues. That's one of several top regulatory news items in 2024.
Synovus isn't having trouble hiring or retaining anti-money-laundering staff, partly because "paying competitively matters," Creson said. In addition, the bank is open to hiring employees outside of its five-state footprint, and it makes sure "folks can see a clear career path," she said.
A huge factor in a bank's ability to steer clear of money-laundering failures is giving executive authority to the officer heading up Bank Secrecy Act/anti-money-laundering compliance, said Sarah Beth Felix, an anti-money-laundering expert who is founder of Palmera Consulting. If that officer doesn't have access to the board and isn't part of the executive team, that creates a problem that cascades down through the company and leads to even more trouble, she said.
"When you have someone who doesn't have the right authority, they will not have enough people, full stop," said Felix, who is also co-founder and chief anti-money-laundering officer at Acceleron Bank, a de novo in Vermont that's expected to open this year. "Then from there, it's an easy leap. You don't have enough people, so that's why you didn't find suspicious activity."
TD, for its part, is in the early stages of what it has said will be a multiyear remediation to correct the deficiencies found in its programs.
At an industry conference earlier this month, its chief financial officer, Kelvin Vi Luan Tran, said the company is "enhancing the investigative capabilities," which includes "adding talent and … refining [its] procedures on how to investigate and analyze customer transactions."
TD's anti-money-laundering remediation costs
"There's no magic or silver bullet," Tran said. "It's going to be a series of improvements … that we need to make and altogether makes up a robust program."
