Wednesday, November 28, 2012


If you were paying attention to the regulatory reports out this year, you know that deficiencies were found when major financial institutions foolishly outsourced some of their compliance obligations, with unsatisfactory results.

I cannot understand how any entity, whether it be a financial institution, NBFI, or broker-dealer, can even think of outsourcing its Anti-Money Laundering/Countering the Financing of Terrorism compliance programme. Do you really want to trust an independent contractor, working outside your site, with OFAC issues ?
 How will you know when they made a difficult decision to pass a new client in a grey area ?

How can you tell when their best compliance staff are on holiday, or out sick, and the files are handed to an inexperienced  (read:unqualified) new employee ?

How do you know when your own New Accounts Reps or greedy senior staff are exerting undue influence over the outsourcing company, to pass new customers that should have been barred ?

How will you know if their other clients' work has so overburdened their staff that your Due Diligence assignments get only quick once over, instead of the attention to detail you need ?

Frankly, you need your compliance performed where you can monitor it on a real-time basis, and not through your inbox. You need to be sure that the people vetting your new clients are (1) trained, and (2) experienced. Never accept anything less. Do not delegate compliance.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.