To really tackle financial crime, individuals should take accountability for their actions within the context of the greater organization. The culture of an organization is critical in promoting a mindset of personal responsibility, and businesses should educate employees in their obligations toward fighting financial crime.
Why? Because when it comes to a breach, an organization must cooperate with regulators by identifying who was responsible. If individuals have been properly trained and educated on their responsibilities, they should be unable to dishonestly evade blame for unethical actions by claiming that they were only following instructions.
Educating businesses on responsibility and accountability
There is a reason for compliance, and it's because businesses have an obligation to help minimize the risk of financial crime. In 2020, fines for non-compliance with anti-financial crime and related regulations exceeded US$14.1 billion1. This comes in part from the fact that anti-financial crime cultures are underdeveloped. I believe it rests on leadership's shoulders to change this mindset.
While individuals are accountable for actions which put the business at risk, front-line staff often think that fighting financial crime is someone else's responsibility. Employees should understand why compliance is important, and they can only do that if leaders show the way.
Organizations should work on their compliance culture and work with the people in their business to help change the dynamic toward compliance. Changing the mindset means helping employees understand the reasoning behind why controls are in place, and showing what the impact on society would be if the organization were involved in financial crime.
The problem can also be that an organization has implemented multiple controls and some people end up having 'policy fatigue': there are too many regulatory variables to keep track of. To counter that, it is crucial to have a thorough understanding of your organization's financial crime risks in order to put proportionate systems and controls in place. This makes it more manageable to train staff and keep them engaged in addressing those risks.
I believe it is essential to have an interconnected organizational structure that helps ensure information is shared from one function to the next. This can improve employee access to up-to-date policies and procedures and can help ensure that they understand them correctly. But employees cannot be expected to be compliant in their role if management doesn't make certain they have the necessary resources to remain skilled professionals.
A strong compliance framework is one of your best defences against financial crime, but it requires both individual accountability and proper guidance from leadership. KPMG professionals can help you navigate the trickiest aspects of compliance by transforming your financial crime operating model while aiming to driving cost savings.
1 The Bank Fines 2020 report - Finbold