In recent years, AML professionals have witnessed an upsurge in high-risk money laundering schemes (i.e. bribery and corruption charges related to the FIFA Corruption Scandal) that have led to regulators requiring banks to thoroughly investigate such risky matters. Whether or not a bank knowingly provided the means for the remittance of laundered funds has become very concerning to banks’ AML departments. With that being said, such increased concern leads larger banking institutions to create a ‘special investigations’ team to ensure that such high-risk scandals discussed in the media are not connected to the bank. Smaller and mid-sized banks have also designated individuals to be point leads when money laundering schemes are uncovered.
So, what exactly is a special investigation?
Almost every bank (especially those offering correspondent banking services) utilizes a Special Investigations Unit (SIU) in its own unique way. Some SIU teams not only conduct investigations into high-risk money laundering scandals, but their ‘business as usual’ (BAU) may also include Subpoena inquiries and USA PATRIOT Act investigations such as 314(a) and (b) and §311 investigations.
At any given moment, an SIU Investigator may be working on five to seven separate special investigations. When international money laundering scandals break, SIU teams now must take on additional work which could include investigations into hundreds or even thousands of suspects in a rushed attempt to mitigate the risk to the bank. Perhaps what we so often forget to realize is that the money laundering scheme is now known to the public. The funds were already laundered; the money that may have potentially gone through the bank is already tainted.
Herein lies the problem: more time spent on large-scale special investigations inevitably takes time away from the BAU workload.
Proper staffing is essential to ensure the timeframe to complete these investigations is met and fully satisfied from a Regulatory Body and Law Enforcement standpoint. Should a bank hire temporary consultants or a full-time staff? We have given you solutions to the potential problem(s) that lead to a backlog of BAU investigations and subsequent issues down the line whether or not the Regulators make a surprise or routine visit:
- First, the SIU team should conduct an initial meeting to discuss not only the current workload of each SIU Investigator, but also the anticipated increase in responsibilities immediately after the money-laundering scandal is brought to the public’s attention. The SIU team should arrange expected timelines to safeguard proper handling of a complex investigation and determine which staff members are best suited to assist. Essentially, what the SIU team is dealing with is not merely one large investigation but several smaller investigations.
- Then, after a money laundering scheme/scandal comes to light, banks need to act quickly and use the analysis performed in the first step above to determine the head count for either BAU activity or the Special Investigation(s). Depending on the time-frame, the bank’s involvement in the scandal and the expertise of current full-time employees, banks should hire an appropriate number of temporary consultants to take on the BAU workload or assist in the special investigation (if they have the necessary experience). The SIU should then delegate a full-time, permanent investigator (FTE Investigator) to train the consultants when brought onboard. As a result, the other FTE Investigators have the time to conduct the complex investigation without worrying about time constraints or the possibility of a back-log piling up. This is just one suggested solution that can help a SIU during a trying time. Taking this course of action could, in effect, minimize the workload and time it takes a SIU to mitigate the risks of a fall out.
Being properly staffed and having plans to utilize permanent and contingent employees when money laundering scandals arise unexpectedly are crucial for the continued success of Financial Crimes programs. Regulators, Law Enforcement, and internal staff will see their senior management and firm, in general, take pro-active steps to quickly begin a corrective course of action.
The SIU is just one aspect of Financial Crimes programs. However, having staffing protocols and solutions prepared across the program will lead to a higher success in attracting top talent, responding to tough but common money laundering cases, avoiding negative news, and setting a standard for best practices across the industry.
For more information about Infinity Consulting Solutions and Compliance & Legal roles visit us at http://www.infinity-cs.com/find-a-job/compliance-legal/ to learn more.