Compliance Professional Resources David DeMartino 212.257.6500 ext.1 ddemartino@compliancepros.net | ||||
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| July 2009 | ||||
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Effective Recruiting Practices During Turbulent Economic Times/Preparing for an Improved Economy Managing Rising Compliance Costs Implementing AML Technology |
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Effective Recruiting Practices During Turbulent Economic Times/Preparing for an Improved Economy |
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As we wind our way through what will probably be remembered as the WORST economic downturn since the Great Depression, it is important to take note that like every economic cycle, this too will pass. It is important for organizations to remember that they not only must survice the economic downturn, but prepare for better times. One of THE most important issues that contribute to survival and growth of an organization is the manner in which they manage recruitment and retention of staff. The lack of a strong retention policy, coupled with drastic layoffs and followed by haphazard hiring polices can create a reputational risk issue which will take years to recover from. Let's examine an issue that can contribute to reputational risk problems: Layoffs. Layoffs are a normal part of economic survival for many companies. Unfortunately, as sales and revenue decrease, most entities utilize staff reduction as a method of increasing shareholder value or cutting losses. While this in and of itself is not terrible, all too often, companies develop a reputation for being "quick to hire and quick to fire". They become known for not placing value on the contribution of staff. Organizations that develop this reputation may find themselves in a difficult position when they want to attract talent during strong economic cycles. Hand in hand with the layoff issue is the problem of RETENTION. All too often, once a layoff occurs, an organization finds themselves in the position of losing many staff members that they may not necessarily have wanted to lose. Recruitment and Retention Strategies in an Improving Economy Be prepared for higher turnover and greater difficulty in recruiting based on several factors:
What does all of this mean? From an HR perspective, you are going to be facing two key challenges in the recovering economy—retention and recruiting—and they go hand in hand. Retention of existing staff must be your first line of defense in your recruitment strategy. If you are able to maintain a workforce that is relatively stable, it will allow you to grow your businesses with the least amount of disruption. In addition, if you are RETAINING staff, your organization develops a reputation as being an attractive place to work. Thus, even in a challenged recruiting market, you will be able to attract what few candidates are out there. Additionally, your existing staff will be your best recruiting sources. Let's discuss some additional recruitment issues: Although effective and efficient recruiting practices should always be employed, a period of economic challenges, such as we are now experiencing, is a most appropriate time to review and modify your current practices as may be required. When an opening occurs due either to a resignation, transfer or expansion, we suggest asking and answering the following questions:
Let's explore the first scenario—you want to recruit on your own.
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In order to help overcome these hurdles, partnering with a capable and professional recruitment firm that specializes in your industry could prove invaluable. In order for the partnership to be successful, the recruitment firm must be prepared to add value to the process. To determine if a firm will add value, ask them the following questions and ensure you are satisfied with their responses:
Remember, to achieve the desired results it is imperative that you partner with the firm selected.
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| Managing Rising Compliance Costs |
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Regulators are constantly raising the bar on financial institutions. Today the cost of compliance is a significant line item on the P&L and the penalty for non-compliance is not just the "cost of being in business" anymore! Tolerance of non-compliance is very low and penalties very high. Increased regulatory scrutiny and large fines have made BSA/AML compliance more important than ever. You must have a strong risk-based program with proof of consistent compliance, which takes continuous, rigorous oversight and time-consuming documentation. In the current economic and regulatory landscape, as banks are setting their goals for 2009 and onwards, managing rising compliance cost is one of the biggest challenges, especially for small and mid-sized banks. As per a recent Deloitte Survey (2008): Top Banks' Compliance spending grew 159 percent over the last 5 years. 60 percent of spending goes to staff compensation, while only 18 percent is dedicated to IT. Today the Chief Compliance Officers are forced to re-examine their CCO's TCO (Chief Compliance Officer's Total Cost of Operations). CCOs are deconstructing their compliance programs through the lens of process management. These elements are:
Over the last few years, several large financial institutions have created teams of compliance professionals in their captive BPOs who are now assisting the CCO's team in the U.S., in executing BSA/ AML related tasks. These banks have discovered that outsourcing/ off-shoring of certain BSA/AML compliance activities reduces the workload on their staff, effectively managing the CCO's TCO and also leveraging the time arbitrage due to different time zones. The major and consistent benefits of offshore outsourcing enjoyed by these organizations include:
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Account Opening
 Today, there are third party service providers like Hanagrove LLC, a subsidiary of Integrated Compliance Solutions LLC, who can assist small and midsized banks avail the cost arbitrage that the larger banks are leveraging on a turn-key basis. One of the most common challenges faced by an institution outsourcing work to third party service provider to an offshore location is regulatory acceptance and navigating regulatory concerns around data security and privacy issues. It's not easy! However, the good news is that this is not a new phenomenon. The large banks have been executing offshoring of AML transaction monitoring through captive BPOs as well as third party service providers for many years. Over the last few years, many of these set ups have been satisfactorily examined by the U.S. Regulators. In addition, the U.S. Regulators have issued several interagency guidelines on these issues:
The twin goals are to (i) drive down the costs of the overall AML program, while also (ii) making it more effective overall. Every bank wants to "do the right thing." They do not want to face the reputation risk of missing something. At the same time, they just want to be sure they are controlling the costs, so they also provide a solid return to their shareholders. |
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| Implementing AML Technology |
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By Gregory Boston KBC Bank Director-Operations Implementing a new Compliance OFAC application can be time consuming and cumbersome for an organization. KBCNY just recently converted a legacy OFAC filtering system to a new state of the art application, not without issues. However, key to the success of the project implementation was having an independent third party consultant. During our initial conversion discussions it was decided that two project managers take the lead, one from KBCNY and another from the vendor. This was then supplemented by an independent consultant who participated as the mediator and project tracker for all stages of the project implementation. It was extremely critical to find someone with the necessary expertise and who had an independent view so as to not compromise the final results of any issues that may arise. Our search was answered with an individual with over 10 years experience and a pioneer in the field of compliance knowhow and technology to boot. A standard conversion from start to finish from a legacy system to an upgrade from the same vendor normally is at minimum a six month project. Here KBCNY was faced with a conversion from a legacy system to a new vendor platform with all interfaces needing to be developed. Imagine trying to finish a project of a different kind in 6 months per a management directive with multiple personalities and disciplines. After carefully reviewing the task it was mutually agreed to by both vendor and KBCNY that this go between person was critical to the successful implementation. |
KBCNY began the project in late November 2008, a time where the rest of the world is beginning their winter holidays. An IT mandated freeze on new software installs for the month of December did not give KBC much time to complete the project within the six month window. Countless weekends and everyday user acceptance testing under the guiding force of our mediator (champion) allowed us to circumvent any differences between all parties, to keep the project on track. I am glad to say that KBCNY put the new OFAC application into production on May 18, 2009 without a hitch, one month ahead of schedule. The moral of this success story is you cannot always do it alone; expertise and industry knowledge from a different perspective sheds positive light on possible hurdles. (They are always there, you need to manage them.) 
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| About CPR | ||||
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CPR is a unique regulatory compliance services firm. A unique blend of compliance recruiting services (executive, permanent, and temporary), and compliance consulting services. Add in managing partners that have essentially pioneered the industry, this makes CPR clearly a leader in the Regulatory Compliance service space. Our commitment to excellence in all phases of our business is unparalleled. As it relates to recruiting, we will provide you with the best most skilled candidates, we work tirelessly to get the right person, after we completely understand your needs. Our Compliance consultant services are surgically focused on getting the job done as expeditiously as possible, and without crippling your budget. We only provide seasoned and experienced consultants, always with the correct skill sets. Our goal is to get it right the first time. |
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