The Inside Track: Decisions, Implications and Humans – A Thank you from the trenches to the frontline fincrime sanctions fighters, from veteran industry thought leader Jon Elvin

The ACFCS Inside Track Series Provides Insight, Guidance and Practical Takeaways from ACFCS Thought Leaders.

By Jon Elvin
EVP of Strategy, Corporate Impact, ACFCS
March 31, 2022

The still rumbling aftershocks of events such as the Russia-Ukrainian invasion and responses around the world have thousands of impact stories and implications for society, families, friends and businesses – both large and small.

For some fincrime fighters, the conflict also has affected them personally, as well as professionally, with relatives or friends in the warzone. Fincrime fighters, in financial institutions, fintech, crypto and government agencies, are also stepping forward in their respective professional roles for the millions of innocent civilians they don’t know.

This is certainly an unprecedented time of soaring sanctions and broader fincrime compliance risks.

The combined might and accumulated acumen of fincrime fighters around the world – the government entities doing the initial investigations and creating the sanctions lists and the financial institution screening teams implementing them – must work together as they never have before to have any hope of stopping an unjust war, according to analysis in an opinion piece in The Hill.

The reason: it takes a network of good to defeat a network with decades of experience doing bad – corruption, money laundering and more.

It takes an ecosystem of financial crime fighters engaging in multi-jurisdictional, impactful disruption capabilities, from small town America, across international boundaries to have a true global reach and shift behavior in a graft-gilt regime in important and meaningful ways.

This article does not attempt to be that 10-page detailed list of specifics of what you might do as an AML/Sanctions Officer administering your program in heightened times.

Rather my goal is to state our appreciation to you and your teams for what they actually do passionately each day and provide others a glimpse of the human side and psychology of what program heads and staff experience.

What often is not told, is how that actually happens inside of our institutions.

Dark denizen designations more than just political preening and basic screening

In simple form, one might say, “how hard is it to take a list that the government provides and just don’t interact with those entities anymore?”

Many say, just run it, push that “magic button” and out pops the answer.

For industry veterans, sanctions specialists and longtime compliance leaders, we know the truth: It is never that simple or easy.

If you have never been in the role of ultimate decision maker and facing the liability in responding to these types of crisis events and the responsive steps required, it is an unbelievable burden of accountability.

Program administrators and Sanctions/AML Officers must make daily decisions on interpreting and adhering to legal and regulatory requirements that are quite fluid.

They must also provide clear operational guidance to the thousands of analysts, investigators and business executives, while keeping a pulse on the organization’s ability to digest these changes and embed within control frameworks and tactical activities.

These professionals take their responsibilities seriously, not just because regulatory expectations are present, but because they know choices they make or do not make have real-world consequences.

This is particularly true for financial crime fighters, including those in the disciplines of anti-money laundering (AML), sanctions screening, fighting fraud and corruption and defending their institutions against cyberattacks and becoming a pathway for illicit movement of funds.

We truly feel for those impacted by Russia actions because practitioners in AML, sanctions and financial crime prevention are caring people and spur immediately into action when economics, financial crime and geopolitical power shifts collide often.

In the sanctions game that sometimes mimics a combination of chess, meets cat and mouse, the mission objectives are clear: think critically, act, and react quickly to countermoves

Fincrime compliance professionals take their respective roles very seriously in safeguarding national security, being a strong referral source for law enforcement and protecting customers, communities, and the reputation of the firms they represent.

Even as some banks have paid billions of dollars for AML and sanctions failures, the industry learns from shortcomings and takes these responsibilities to heart.

These control programs include broad compliance and risk management frameworks, assembly of large talented teams and billions of dollars in investments to fulfill our part of the control component of the ecosystem maintaining the integrity of the overall system.

Many of these institutions have restocked their investigative and sanctions programs with leading technology innovation applications, added top officials from the U.S. Treasury’s Financial Crimes Enforcement Network, Office of Foreign Assets Control, Office of Terrorism and Financial Intelligence, IRS Criminal Investigations, the U.S. Department of Justice, and work hard to strengthen a more organic culture of compliance.

As an industry, we also know what the mission objectives quickly becomes for institutions when major events, such as the Russian Sanctions, occur.

As a community, we must watch the money movements, look for patterns, interpret sanctions program guidance, understand exemptions, review carve outs, prepare answers for everyone that immediately asks, and then yes, act.

Act is a small word itself but looms large in the intricate nuances and compliance complexities of what that means in the trenches for fincrime fighters – in the public and private sectors.

We know that there is so much out of our control.

Whether that is the decision of a junior analyst to risk rank an entity low, when it should have been high or an investigator to not file a suspicious activity report (SAR) when maybe they could have, are daily decisions made in the thousands.

Our policy standards are pretty clear, but human judgment, situational complexity, commercial setting influences and time constraints—results in a certain percentage of inconsistency and sometimes the industry does get individual decisions wrong.

Criticizing tactical one-off decisions does not create a better fighting force.

Reinforcing the good behavior, taking time for the teams to constructively understand and learn from individual items where a different outcome might have been a better option and motivating the teams that are an important layer of defense, is likely a stronger driver in future higher achievement and consistency.

When the industry experiences more operational normalcy the job is challenging enough.

But when major world or regional events occur such as those associated with Russia, Compliance teams are faced with an accelerated solution equation raising the stakes for adherence to rules, and implications for both properly identifying exposures as well as for misses.

These are things the senior Risk leaders in AML and Sanctions embrace with courage and conviction.

A compliance officer in a time of crisis: defense, offense, going for the hat trick

For compliance leaders during a major risk management inflexion point, they will have to wear many hats.

They are part crisis action officer, strategy consultant, politician, author/editor, game theorist, problem solver, data coordinator, motivator, storyteller and deconfliction arbitration expert.

They take their responsibilities seriously, not just because they are regulated, but because they care and want to make a difference.

Leadership, command of your program, and strategic agility are important skills to call on particularly when all action steps and answers are never known at the outset, specifically to questions not yet even asked.

A critical trait of successful AML/Sanctions leaders is being comfortable operating without all the facts, with ambiguity in the “grey and gray” situations.

Often overlooked in the early stages of action plans coming to life, is the importance of communication and connection of confidence at all employee tiers throughout the ecosystem of execution – confidence that can be bolstered and decision-making sharpened by extending deep and broad training in all areas of financial crime.

If we step back for a moment, as an industry, we understand the context and ebb and flow of sanctions designations – something banks and corporations generally associated with certain regions or high tech dual-use goods designations have had to monitor and adjust to for decades.

In the most recent events, the breadth of sanctions has impacted new industries, regions and channels.

Blacklisting entities, countries not new, but expansion explosions can overwhelm

Overall, organizations actually do quite well in digesting and operationalizing the more routine sanctions program changes, including releases of blacklisted companies and individuals and name additions/deletions.

But that can change dramatically when sanctions spiral higher and faster than screening systems and human analysts can keep pace with – and that’s not even taking into account the typically hidden maze of shell companies the wealthy, corrupt and elite use to hide their ownership of assets that could be touching your institution.

In these larger more crisis-oriented events, where the speed and uncertainty is predicably unpredictable, the more mature programs will create a specific cross-functional and highly experienced intake and decision unit to receive, assess and direct initial actions unique to the situation and government requirements.

Conditions, standards and expected actions are fluid.

Recognize these points, and outline the range of actions you must take, options you might take, and be clear on the tradeoffs and likelihood of each decision implication.

Juggling is expected. Recognizing that your organization needs you to create a plan of execution and administer it confidently is why you actually have the position you do.

Failing to plan is planning to fail, but so is not recognizing team strengths and weaknesses

No plan can account for and anticipate everything, but a directionally-correct plan in action that adapts is much better than operational areas scattering and guessing.

Some quick tips to remember in the heat of the battle:

You may not get everything right the first time and likely will not have all the answers
Be comfortable in ambiguity, but a quick reactor to changing conditions
Not all team members react well under pressure—acknowledge this, watch for this, and rely on the seasoned top performers
While you may start with a sprint, remember it is often a marathon so be disciplined in your asks of the teams and recognize signs of institutional fatigue.
At times, it may seem overwhelming, the workload large, with questions your Board, senior management and regulators ask coming too quickly, but that should be expected as someone is also asking them directly.

They too are uncertain as to what exposure you may or may not have (both have value) and not knowing in those moments makes all stakeholders uncomfortable.

As organizations outline the marching orders for their operational support areas and front-line, don’t overcomplicate things, but recognize ambiguity and uncertainty in action is a time-killer for operational execution and will certainly lead to underperformance.

It is the Goldilocks story: has to be just about right or you will underdeliver or collapse by the overreach workload creating frustration in business leadership and a feeling of no hope in your operational

Entering the multiverse of multi-dimensional, crunch-time decision-making

For non-practitioners, please remember the actual mechanics of what gets done in the trenches is not always single dimensional searching and decisioning.

Direct matches, those are the easy ones.

It is the transactional-related parties and relationships through connected “bad-actor collaborators” that create multi-layer challenges and risk.

Complex business entities—shell, front or other; and facilitators, family, gatekeepers that quickly engage willingly, or unwittingly, to move and mask ownership and prohibited transactional actions quickly emerge to increase elements of complexity.

Transactions that may be flagged by detection rule sets and algorithms don’t have a voice and a validated conclusion at this point of initial detection, rather questions investigative teams and legal professionals must look into and disposition.

Technology and advanced search capabilities directed at large data sets and analytics can help, but it still takes time and humans to validate the correct outcome.

Your business partners and first line of defense can help shape customer requests for more information and calm any unnecessary customer interactions or perceived negative experiences.

Your organizations, customers, employees, and members of the communities in which you serve and the countless victims impacted from whatever crisis is occurring in the moment benefit from your focus, passion, determination, tenacity and frankly, grit.

Drive Forward as they say, and we thank you for your efforts and duty of care.

No one will ever say this fincrime compliance field is for the faint of heart. It will push and test you. Give you hard days and long nights.

Drive forward with what is right and know the results and actions protect many and are our small part in creating a stronger fincrime community.

The traits of success for fincrime fighters: the mind of scientist, the heart of a champion

One of the most oft-asked questions that I get is: What does it take to be a successful fincrime compliance leader?

There is no easy answer.

It starts with a deep genuine care and respect for the accountabilities of your role and overall mission.

Here are some additional areas vital for success: The mind of a scientist, willigness to embrace data analytics, mathematician and military tactician.

You need to be creative, curious, courageous – and charismatic.

You need to be a zealot and calming force for your direct fincrime compliance team, a diplomat with the business and front-line executives and a politician and lobbyist with the C-suite and board as necessary.

Even so, you must be relentlessly resourceful and creative.

To achieve effectiveness, you must recognize that it takes component pieces across the ecosystem of execution and your fellow committed colleagues, not just a well written check the box program an attorney helped write.

It must come alive naturally and cannot be forced.

Further, success requires a synthesis of technology and human tactics, an amalgam of the speed and efficiency of powerful, AI-fueled systems and the knowledge, skills and experience of informed and empowered analysts and investigators to build strong programs and conquer compliance.

You need to know how to defend your position and decisions with logic, reasoning and written and verbal precision.

But you also need to be able to get your ego out of the way to see things from new vantage points – and to better understand internal fincrime foils from their perspective, knowing full well the frontline and the business line are the first line of defense.

You need to go beyond fearing regulators and bridge the gap between rules and results, pairing passion and compassion to realize that behind the hundreds of specified unlawful activities generating the illicit finance that needs laundering are very real and very vulnerable victims.

So too, must regulators, auditors and testing functions embrace multiple ways to achieve success, not a blanket, one size fits all approach.

At ACFCS, the vision is to strengthen the overall financial crime fighting community together.

We help educate professionals on emerging risk, criminal typologies, creative tools and share ideas across multiple variables, thinking holistically and prompting all to see the “big picture.”

Remember, if your teams care and have the right tools, training and connection to a wider community working to share knowledge and fight together against autocrats, tyrants, corrupt dictators, sanctions evaders and their cronies, you can change and even save lives – making the world a safer place for everyone.

We say thank you to the community of financial crime fighters—Do Your Part and Drive Forward with Purpose!

Jon Elvin, EVP of Strategy and Corporate Impact, ACFCS

Jon Elvin is a highly accomplished forward-thinking risk executive and has more than 30 years of professional experience. Jon is an independent risk advisor and consultant for the financial crimes industry.

Among other industry roles, he currently serves as Board Advisor and EVP for Strategy and Corporate Impact with the Association of Certified Financial Crimes Specialists (ACFCS).

Prior industry roles included EVP, Chief Bank Secrecy Act and Anti-Money Laundering Officer and Chief Compliance Officer with a top-tier financial institution for 17 years; Senior Manager with a big 4 accounting firm; Senior Intelligence Analyst with the US Government National Drug Intelligence Center (NDIC/DOJ); and US Army (Retired).

His foresight and actions advanced global programs, created unique visions for special investigation functions, fostered commitment to talent management, adoption of advanced analytics and next-generation transaction monitoring concepts to improve effectiveness and efficiency.

He is a Certified Fraud Examiner and Certified Anti-Money Laundering Specialist.