There is no doubt that the last few years have been a challenge for all, and the financial services industry is no exception. Credit unions experienced significant changes in 2021 because of the pandemic, increased remote work trend, and growing digital usage. Employee turnover is one of the significant impacts seen in the financial industry, as many companies competing for valuable resources offer remote work options that many credit unions cannot provide.
Opportunities for employees in the new remote environment are endless, and according to Forbes Magazine, turnover for businesses around the country is at an all-time high. Moving into 2022 may be an excellent time to analyze current staffing levels and the associated risks of losing valuable members of your team.
Adequate staffing is crucial for areas with high regulatory scrutiny, such as the Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) and fraud functions. In their advisory on the importance of a strong culture of compliance (FIN-2014-A007), FinCEN states that one of the keys to a robust BSA/AML program is devoting adequate resources to its compliance function (both human and technological). What better way to strengthen your credit union's culture of compliance and build your use case for your senior management than through a comprehensive staffing assessment? Data speaks more than words when budgetary concerns are at stake—every time.
With the passing of the Anti-Money Laundering Act of 2020 (AMLA) as part of the National Defense Authorization Act, FinCEN will be issuing AMLA regulations and guidance throughout 2022 around the requirements of AMLA, which will affect the AML work effort for credit unions. Each institution will want to ensure you have enough staff to cover the existing workload and any additional duties coming from new guidance.
Credit unions have differing AML staffing needs depending on the institution's size and risk profile. Small, low-risk cooperatives may have one compliance officer to run all compliance functions, including BSA. Others may be larger institutions or provide services to higher-risk customers, such as cannabis-related businesses, and will have a much larger BSA staff.
To understand the 2022 needs for your unique AML team, a staffing assessment is recommended to ensure adequate coverage for all duties, so none fall through the crack. Due to missed deadlines, untimely investigation, omitted high-risk reviews, and other significant deficiencies resulting from insufficient human resources, many regulatory penalties have been given. Penalties are expected to increase in this area due to AMLA, including an increased penalty provision for non-compliance and encouragement for whistleblowers to speak up when they see an insufficient AML program. Now is the time to be prepared.
What steps should be taken by credit unions in performing successful staffing assessments that will ensure you have adequate staff for the current workload and future tasks, some of which may be large projects?
In Abrigo's recent publication of a Guide to a Successful Staffing Assessment, specific steps are provided for performing a detailed and thorough staffing assessment. The guide includes summarized steps for several important categories, such as conducting a risk assessment, updating policy, procedures, and processes, AML and fraud transaction monitoring, enhanced due diligence reviews of higher-risk customers, and OFAC screening. In addition, the document explains how to track volumes of each category and how to analyze the data to give you the correct number of employees to meet all regulator expectations.
There are other non-routine aspects of AML and fraud requirements to consider when performing your 2022 staffing assessment. With the release of the FinCEN Priorities, once guidance is released, you will want to update your policies and procedures to address all eight priorities and the regulation or guidance requirements that FinCEN will write. Another unique factor to consider is the increase in pandemic-related and cyber fraud, which is expected to continue to escalate into 2022.
As mentioned, employee turnover nationwide has increased significantly in 2021, and in the critical positions of BSA Officer and AML and fraud investigator roles, this can undoubtedly impact your regulatory risk. BSA is an area that cannot afford time without a filled position, so your staffing assessment should consider that risk. Mitigation of risk in losing these important roles may include comprehensive succession planning and cross-training, as well as an outsourced solution should you find yourself with an immediate need for a position that your credit union is trying to fill.
Due to the passing of the AMLA, the landscape of the AML and fraud industry in 2022 is expected to undergo its most comprehensive reform since the signing of the USA PATRIOT Act two decades ago. The effort that credit unions will need to perform is yet to be determined, but it is essential to be prepared.
Remember, regulators, don't care how much you have in your budget for staffing. They must be confident that you are sufficiently staffed with the correct number and experience level of employees. Avoid that criticism by sharing your staffing assessment with your regulators and ensuring your program is sound. Remember the importance of succession planning for each key member of your team and consider cultivating relationships now in the event you find yourself with a severe gap in staffing resources.
Proper planning is the key, especially with the unknowns coming around the corner. Suppose your credit union in already tightly staffed, and the thought of finding the time to conduct a comprehensive staffing assessment seems daunting. In that case, an outsourced third party might be your answer. A neutral eye into your AML program is always of great benefit.
Is your staff set up to work as efficiently as possible? Abrigo’s BSA/AML Consulting Services team can analyze your current staffing roles and make adjustments that will streamline your organization.
Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo’s platform centralizes the institution’s data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth. Visit www.abrigo.com to learn more. Follow Abrigo on social media using @WeAreAbrigo.
Terri Luttrell is CAMS-Audit certified and has over 20 years in the banking industry, working both in medium and large community financial institutions in the areas of compliance/fraud, commercial lending, and deposit operations. As an AML consultant, she has helped institutions develop BSA/OFAC programs to ensure all regulatory requirements are met and managed a team of AML investigators for a large/cross border institution, among other roles. Terri is currently Compliance & Engagement Director with Abrigo (formerly Banker’s Toolbox).