Careers in Financial Crimes Compliance

The most profitable industry in the world is financial crime, hemorrhaging over $2 trillion from the global economy annually by some estimates.1 Money laundering, wire fraud, extortion and cyber-hacks are common methods used by criminals to steal from corporations and institutions alike. But the crimes don’t only harm the bottom line-they affect real people’s lives. Successful fraud is the engine that funds human trafficking, terrorism and the spread of illicit drugs.

Growing at 9.4% per year, these illegal fund flows show little sign of stopping.2 Governments are doing what they can to fight the problem. We recently saw the war on cash take the next step with the ECB (European Central Bank) officially announcing the retirement the $500 euro bill, as its high value (equivalent to roughly $569 U.S. dollars) caused concerns it facilitated black market transactions.

cash ban on 500 euro or 100 bill

A cash ban on 500 euros?

Local governments are also investing capital and resources in technologies designed to combat financial crimes. Crafty investigators are using the latest technologies to beat the crooks at their own game. CLEAR, a software program by Thompson Reuters incorporates the use of data analytics in fraud detection. It probes a suspect’s social media connections, professional networks and various business ownerships-mining data for patterns that might constitute improper relationships.3 Combining cutting edge technologies with traditional fraud detection techniques, investigators have a fighting chance against these elusive criminals.

Financial Crimes in Banking

Two financial industries where fraud is especially rampant are banking and insurance. Onerous regulations require banks of all sizes to staff up their compliance and fraud detection departments. One of the largest global banks, Britain’s Standard Charter, recently doubled hiring at its Financial Crime Compliance Team. “We need to protect the communities that we serve from the damaging effects of financial crime” John Cusack, head of the bank’s Global Head of Financial Crime Compliance reassures.4

Regulations typically target large, multi-national banks where the cross border nature of operations is ripe for hiding fraudulent activity. The crimes are often hidden in illegal activities stemming from foreign subsidiaries or joint ventures. An additional concern for banks is keeping up with the sheer volume of electronic fund transfers and international wires done through the SWIFT system. Verifying the source of incoming and destination of outgoing wires can often overwhelm understaffed wire departments.

While regulations typically target large banks, another subsector of banking is beefing up its fraud protection-smaller, community banks. Bankers financial careers might actually come from these smaller banks that often have trouble attracting and retaining top risk management talent. This trouble stems from being located outside metropolitan areas and lower pay packages. Smaller banks typically aren’t able to pay candidates as much as bigger banks. Large banks are able use their extensive equity base as a currency for key hires while smaller banks typically do not (candidates at smaller banks may have to wait for a mutual bank conversion opportunity).

Consequently, community and regional banks may have to go out of their way to sell the compliance candidate on the benefits of working for a smaller bank. According to an American Banker interview, these include a greater work-life balance (better hours, lower cost of living) and opportunities for upward mobility by giving the compliance personnel a greater voice.5 Retaining these professionals, presumable involves managing expectations, including pay, so that they understand the differences between a community and a commercial bank work atmosphere.

Insurance Industry Fraud

Life insurance products are an especially popular vehicle for laundering money. Many of the largest life insurers have operations and policyholders all around the world. It is this cross-border nature of operations that conceal the frauds. According to the Financial Action Task Force (FATF) between 1999 and 2003, roughly 65% of money laundering was done through life insurance products.6 Further, the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) identified ‘covered [insurance] products’ have a “higher degree of risk for money laundering.”7 Covered products include permanent-life insurance policies and individual annuity contracts that have a cash value or investment features.8

The money laundering remains hidden because many of the insurance products are actually sold through a bevy of brokers and middlemen, not the insurer themselves. When these intermediaries are spread out globally, it can be very difficult to track the source of funds. Depending on the contract, the beneficiary can also be a completely different entity than the policyholder. The U.S. Customs Service uncovered 200 life insurance policies that were purchased in the Isle of Man with $80 million in drug money, with cartel family members as beneficiaries.9

Employment Demand for Financial Crime Professionals

A Dow Jones/ACAMS survey revealed that a major challenge for anti-money laundering (AML) professionals in 2016 is a deficit of accurately trained staff.10 While this is a problem for the firms looking to hire, the supply/demand imbalance presents a real opportunity for new candidates. The numbers are bearing this out as the median annual salary for a compliance manager in banking is $70,969.11 Focusing on economic crime investigation, Simply Hired found the average financial crime salary is $70,000 with supervisory positions significantly higher.12 Increased job security is another benefit because banks are hiring candidates who want to be patient and stay in positions for a longer-time period than perhaps other financial careers.

Landing a Job in Compliance

Given the aforementioned scarcity of compliance professionals, a candidate with further training in the detection and prevention of financial crimes could rise to the top of the applicant pool. There are number of degrees, certificates and designations throughout the AML space that can further one’s financial career options. For degrees, a Masters in financial crime compliance should be highly coveted by the risk management departments of financial institutions. An online financial crimes investigator certificate offers professionals a flexible, cost-effective option to increase their education. Finally, the Certified Anti-Money Laundering Specialist (CAMS) designation is an increasingly popular program focusing on the detection and prevention of money laundering and associated frauds. A big reason for CAMS’ popularity is the large increase in compensation designees may enjoy. The ACAMS Financial Crimes Compensation Survey revealed that CAMS-certified professionals earn an eye-opening 42% more on average than non-certified financial crime professionals.13 With no sign of slowing, the unfortunate reality of financial crimes should keep aspiring financial crime investigators with plenty of opportunities for employment in the financial industry.