WHAT PREPARES A COMPLIANCE OFFICER TO CONDUCT ENHANCED DUE DILIGENCE INVESTIGATIONS?

The most demanding, and interesting, compliance work that I have ever handled was a position that required me to investigate only high-risk potential clients, which called for Enhanced Due Diligence exclusively. As the gatekeeper, I was able to catch money launderers in real-time. My background, as a banking lawyer-turned career money launderer, equipped me with the tools necessary to catch people in the act. Unfortunately, most former money launderers want nothing to do with the financial world after they are released from prison, for fear that prior criminal clients who are still operating, may take offense, and do them harm.

If a bank cannot employ reformed money launderers, who then should they choose for the most difficult compliance tasks? Who can be trusted to identify the money launderers and transnational financial criminals?

There are a number of options, and I am going to run through them here:

(1) Lawyers: you may have noticed that most compliance directors at large banks are attorneys. Lawyers have a number of advantages as compliance officers; they have a prior undergraduate education before law school, meaning that it generally includes a Liberal Arts background, which is usually a well-rounded education, which is a must for enhanced due diligence, inasmuch as we want people with a large knowledge base, since their opponents are certainly well-educated. They also know about business entities, from their law school training, and most importantly, they learn Issue Perception, which is a critical skill in identifying normal appearing, yet inconsistent and suspicious transactions that others may miss.

2. Retired and former law enforcement officers, especially ex-white collar detectives or investigators: These individuals have serious experience in determining whether transactions are illegal; their skills can easily be adapted to inquiries regarding regulatory, as well as criminal money laundering, subjects. 

3. Former military, especially intelligence officers: These are problems solvers, used to working in environments with unknowns, and who often early transition over to AML/CFT positions. They bring significant relevant skills to the job, as well as maturity, there ability to work under pressure, and discipline.  

4. Graduates with business or other degrees, supplemented with CAMS and other vocational courses: these constitute a large segment of the compliance population. Whether they are competent to effectively handle Enhanced Due Diligence investigations depends upon the individual.  

Which category constitutes the class best able to ferret out the money launderers literally in the act ? What do you think? 

                                             (Originally appeared on LinkedIn)