The annual New York City Marathon is just a little over two weeks away. If you’re planning on running in it, you hopefully began training many months ago. Unless you’ve got some superhuman characteristics, the average person can’t simply run a marathon on a whim, without any training.
However, if information comes to light that indicates your financial institution has some holes in its AML monitoring process and may have missed some suspicious transactions, you could suddenly be feeling like you have to run a spur-of-the-moment marathon: the dreaded look-back project.
Whether your institution finds the deficiency itself or your regulator does, what it typically means is that your financial institution must “look back” at all applicable transactions for a period of time to see what you missed. And when you finds something, you must file the missing currency transaction reports or suspicious activity reports. As regulatory enforcement actions continue to focus on AML, more and more financial institutions are facing the prospect of undertaking a look-back project, which can be very time consuming. If you find yourself in such a position, however, don’t despair. The good news is that it is possible to come out alive and well on the other side.
But like a marathon, the look-back project can be a challenge for even the fittest among us. As if keeping up with AML monitoring on an ongoing basis isn’t hard enough, a look-back project typically adds a whole new layer and then some on top of what your institution is already trying to manage. Here are three things you should know before you start this marathon.
1. Find a Strong Case Management System
Whether it’s a database you create or work to develop with a vendor, an investment in a strong case management system can help you keep track of what is likely to be thousands of accounts, customers, transactions, and reports that your look-back will review. Hopefully, you won’t be doing the look-back project alone. But the more people you have involved with the project, the more you need a good case-management system in place.
You don’t want to finish the look-back, only to find that you lack continuity in the methodology of the reporting. Nor do you want to get deep into the project and lose track of what needs work and what is complete.
If you don’t start with a system in mind, and don’t try to maintain uniformity between employees, you may end up spending just as much time doing quality control as you spend conducting the look-back project. Do it right the first time and preserve your sanity by preparing your case management system before beginning.
2. Pace Yourself (And Expect to Hit a Wall)
Think of a look-back project like a marathon. You begin a marathon knowing you have 26.2 miles to go. As you proceed through the course, the distance you have left to travel decreases. But as it decreases, so does your energy, and each mile gets harder.
A similar phenomenon happens during the look-back project. As you narrow down your workload, the cases you are working with tend to get more difficult to sort through.
Just like a runner on mile 14 of the marathon, you will hit a wall. If you anticipate this and have a plan for how to motivate yourself and your employees when you get to this point, you will be able to push through it. You may need to give people some time away from the project and bring in fresh blood every now and then to help keep the project invigorated.
3. Finish Strong
An experienced marathoner knows that hitting mile mark 26 does not mean they are done. They still have that last .2 of a mile before they reach the finish line.
Similarly, look-back projects tend to have a lot of loose ends that need to be tied up once you complete every case. Make sure to leave enough in the tank to push through those last few loose ends so that you can finish the race strong.
Being hit with an enforcement requesting a look-back may seem as daunting as running your first marathon. But if you have a strong case-management system, pace yourself, and finish strong, you will make it to the finish line.
Ken Agle, President of AdvisX, brings more than 25 years of experience covering almost all facets of financial institution risk management operations. He has conducted more than 350 compliance reviews and has assisted more than 200 financial institutions throughout the United States. He has developed and implemented systems and training programs on all phases of banking risk management, including, but not limited to BSA/AML, fair lending, loan review, HMDA, CRA, BSA, operational compliance, TILA, and RESPA. He has written numerous regulatory responses and appeals and has been instrumental in assisting institutions with challenging circumstances while facing regulatory enforcement orders. He has partnered with McGladrey & Pullen, RSMI, Promontory, Sheshunoff and other multi-region firms to provide support services to financial institutions. Mr. Agle specializes in strategic regulatory response and in developing and implementing both proactive and reactive tools and systems to preempt and resolve issues affecting today’s financial institution. For information on AdvisX’s look-back services, contact Ken at ken.agle@advisx.com.
