In AML Fight, Banks Encounter a Troop Shortage

WASHINGTON — Just as regulators pressure banks like never before to bolster their anti-money-laundering programs, institutions are scrounging to find talent to meet the compliance burden.

Bankers, consultants and the regulators themselves say one of the biggest challenges, particularly for community banks, in ensuring AML systems fulfill expectations of federal agencies is the scarce manpower available to implement them.

The difficulty arises more in filling lower-level compliance positions than senior roles. Experts say it is hard to keep up with turnover, and the sharpest compliance professionals tend to be going to the same big banks, leaving smaller institutions in the lurch. Even banks with solid compliance teams in place struggle with succession plans.

"The pain on the small bank side is not so much what is going on at the top, but really at the analyst and boots-on-the-ground level where there is such a demand for those resources," John Caruso, a principal for KMPG's Forensic Advisory Services, said in an interview during a recent American Bankers Association conference on AML compliance.

A key factor is only a select few banks can afford to pay the most competitive salaries, giving them an obvious advantage in finding talent.

"This is a very big problem because there is a drain of resources," said Amy Rudnick, a partner at Gibson Dunn & Crutcher and former director of the Treasury Department's Office of Financial Enforcement, a predecessor to the current Financial Crimes Enforcement Network. "The banks in the prime locations and who can pay the most money are attracting all these resources."

But also complicating the search for new hires is an overall shortage of entrants into the compliance field.

"Younger people are not flocking towards banking and they are certainly not flocking towards compliance, because of the incredible pressures associated with it," Robert Rowe, vice president and senior at the ABA, told the conference attendees.

And the shortage of AML talent is not limited to the banks. Jamal El-Hindi, an associate director at Fincen, told the conference that the agency's policy division currently has open job postings. "It is a big issue … for all of us," El-Hindi said.

Some AML experts have begun recommending that banks broaden their search for staff to include candidates who may lack compliance training but have a firm background in business, and can learn the specifics of implementing Bank Secrecy Act procedures.

"The skill set of an AML person typically was compliance background or legal, but having a business understanding can make you particularly useful in an institution, not just for sitting at the product meetings, but understand the vulnerabilities of a product before it is explained to you," said John Byrne, executive vice president for the Association of Certified Anti-Money Laundering Specialists. "That is a way to bring in some people that perhaps you can interest in getting into what we think is an interesting career, but have a business background."

But even larger banks must work to attract and keep talent as AML compliance have experienced significant turnover in recent years. "The deck chairs keep moving," said Byrne. "The same people seem to keep going to the different locations."

In response to the shortage of compliance professionals, some institutions have taken steps in their recruiting to ensure there is a stream of new talent. For example, American Express has created entry-level programs that recruit new college graduates for jobs as AML analysts.

"It is very difficult to find people who have good analytic skills and have the ability to write and communicate clearly and we are seeing they are being taught that in college," said Richard Small, a senior vice president in the AML department for Amex.

Small said the company is aware that a "majority" of the newly trained AML staff will likely depart "two or three years out, but if we have a continuous flow where we bring them in and we train them and they give us two or three good years and then if they move on they move on."

But observers say such training programs are a less viable option for smaller institutions.

Brian Wimpling, a BSA officer at Capital City Bank in Tallahassee, Fl., said the investment of resources into training recent graduates would not be worth it for his bank if they just left shortly thereafter.

"If you can attract someone who is young and ambitious and you take the time to mentor them and you train them, the amount of money that I can pay them can't compete with a larger financial institution," Wimpling said. "So three years down the line I have invested a lot of time and effort into training someone and mentoring them and have them understand what we do, only to have them move to Atlanta, or New York or Charlotte."

Rudnick warned that banks which develop training programs for young analysts must be diligent in overseeing the recruits.

"You need to make sure that you really are mentoring them, training them, keeping on top of them," she said, adding that the regulators may blame AML mistakes on the hiring of inexperienced staff. "You have to make sure they are doing a really good job because otherwise you" will face supervisory concern.

Meanwhile, concerns about available talent among lower-level AML compliance staff has also sparked worry about the management of teams when longtime senior officers step down.

"That is something we have been seeing — a lack of a continuancy plan if a BSA officer leaves," said Koko Ives, a manager of BSA/AML compliance with the Federal Reserve Board.

Wimpling said it is unclear where his bank would look for a successor for him.

"When I retire and — not that I'm an expert — the question is where does that level of expertise come from and how does a small community bank or a smaller community bank attract a qualified BSA officer with significant amount of experience given what their budget will be," he said.