In this Interview with Helen Tudor and James Strover of recruiter’s Sheffield Haworth, Financial Crime News wanted to know, whether the FCC market was still in growth mode, whether important changes in the market and in expectations of candidates were noticeable, the effects of machines on staffing levels and roles, the effects of all of these on getting hired, staying hired or getting fired, and much more besides.
1 – FCN: Is Financial Crime Compliance still in growth mode or have we seen the peak?
HT/JS: Combatting Financial Crime continues to be one of the highest risks facing Financial Institutions, and as a result we have certainly seen significant growth, particularly since the financial crises through the first half of this decade. The Association of Certified Anti-Money Laundering specialists has seen worldwide membership jump, for example by over 60,000 in the past 12 years, with chapters established all over the world. It’s unlikely this level of growth will continue and in fact as many organisations have ramped up their hiring, we are now seeing this begin to change.
2 – FCN: What kind of Change?
HT/JS: Both the US and UK markets, led by the largest financial institutions, have significantly ramped up their financial crime fighting capabilities across the board, in response to concerns that they were not doing enough, or could do more. However, these programmes are maturing and particularly for the large change programmes, a number are coming to their natural end, with people moving off and programmes looking to become more efficient after the significant investment that has gone into raising their games. That said, as the US and UK Banks right size their operations, we still see growth in the US Foreign Bank Market, in parts of Continental Europe, the Nordics, Asia hubs, and Australia, particularly for talent that is willing to relocate and demonstrably have the skills required.
3 – FCN: What is influencing these changes?
HT/JS: There are a lot of factors at play. Here are some of the most important things we think are affecting different markets in different ways:
Where banks have underinvested, and are under pressure to catch up, growth will remain strong. This is the case across many disciplines, including sanctions and ABC, as well as money laundering prevention, particularly in controls roles.Where banks have invested in multiyear change programmes, many of these have passed peak investment and are looking to land or have landed and now the focus is on operational effectiveness and efficiency. In this environment, we are seeing increased activity in offshoring, utilising new technology as well as in organisational consolidation, where firms are seeking to right size organisations for the future. We are also seeing a change in the types of capabilities being looked for.
4 – FCN: What kind of capabilities?
HT/JS:There is a growing demand for data and technology literate staff to add to existing traditional capabilities, particularly as data and technology are now seen as critical components to any successful financial crime programme. In addition, intelligence analysts, law enforcement investigators, sanctions specialists, and anti-bribery and corruption skills are in demand.
Based on discussions with a number of FCC leaders, some believe attracting diverse expertise can be additive to encouraging more creative thinking and utilising best practice from other industries. To others, they feel that whilst this is entirely possible, they also acknowledge it is a high-risk strategy. In certain areas, particularly in analytics functions where many of the skills are transferable, it can make a lot of sense. Another source commented that “there is no easy job in financial crime compliance, no easy bank or financial institution to work for.…it is high stress, high volume and long hours.”
Transitioning into a Bank, particularly one ramping up its Programme can be challenging for those coming from outside the function and especially for those that are new to the industry.
That transition can sometimes be hit and miss. From a recruitment perspective, one of the key challenges firms find is how to assess the suitability of such candidates and ensure that they are fully briefed on the cultural dynamics and work environment which can often be a shock, particularly for former law enforcement officers; “the mindset is often very different, they are there to report suspicious activity, not look for evidence and report on crime.” said a source. Another that, “law enforcement officers sometimes come with a professional view…..which mind set can create an atmosphere of fear and distrust which is not always helpful.” Where these hires don’t work, there are few other alternatives within an organisation. It’s different for data analysts whose skills can transition into many areas in a firm, and many see entering the Financial Crime sector as an ideal starting point before developing their expertise into another area within the firm.
There is also a trend of FCC SME’s at a senior level transitioning from Financial Institutions, not only into Consultancies which has historically been an alternative avenue for professionals to explore, but to Fintech and Regtech in advisory roles or to build up an FCC SME capability. As we noted above, just as there are challenges in transitioning into the Financial Services industry which are generally heavily regulated and governance’d organisations, there are also challenges transitioning to the Fintech and Regtech space which are, well, almost the complete opposite.
5 – Are Machines going to replace humans in the FCC space?
HT/JS: Banks are beginning to see successful use cases where adopting new technology can help offset the costs of compliance. This will reduce the number of FCC staff required, particularly where employees undertake repetitive rule-based tasks, for example in screening and monitoring. The answer to anyone concerned about the future, is to invest in themselves and ensure they are capable of being able to operate within the more challenging higher end investigation work, where technology will augment human activity, it is unlikely to replace it any time soon.
6 – How do these changes impact on the most senior leaders of the FCC function?
HT/JS: Certainly, these changes are impacting and influencing the most senior FCC leadership positions. For example, turnover in leadership roles is not uncommon after 3-5 years in post, due to the intensity and challenge of the roles, especially at firms under increased scrutiny and pressure. Another factor is the consolidation of control functions over time, particularly with Compliance, to capture synergies, which can lead to changes to senior position holders’ responsibilities and accountabilities. This can in turn affect seniority and the motivation to continue, and in other cases provide additional opportunities beyond Financial Crime Compliance.
7 – FCN What advice would you give to those looking to move into senior leadership positions about the skills required?
HT/JS: Beyond obviously having the requisite FCC knowledge and experience, there are some key attributes we have seen that are mission critical to a successful appointment. Bank boards and C-Suite executives expect leaders of FCC to have a strategic, long term view of the nature and shape of the response to fighting financial crime, with a good understanding and an opinion on how to exploit the opportunities presented by data and technology to augment current activities. Another key criteria is the ability to lead and influence at the executive level, with communication skills at a premium, and the ability to attract and retain key talent and build and maintain effective teams. Another essential is a strong personality, having courage to stand up for and challenge colleagues, including superiors at the highest levels of the organisation. As technology continues to evolve, it is clear it will have a significant impact on the human element of Financial Crime and the general view amongst many sources is that the new breed of financial crime leaders must combine an ability to engage with and influence, be technology literate, be able to effectively manage partnerships with business and technology divisions and have a strong understanding of data analytics and the ability to source, clean and utilise data effectively.
This has already driven some firms to look beyond the pool of subject matter experts at MD level and identify individuals who may not have the FCC subject matter expertise but bring in these other qualities. At the same time, there are real risks in undervaluing the subject matter expertise and layering the best FCC talent under those that have a rudimentary understanding of FCC and are unlikely to know what “good” or even “good enough” looks like.
This should nevertheless be a wakeup call to SME’s that are being passed over for potential career opportunities to invest more in themselves, for example via leadership development programmes, or via coaching. We have seen this being done well by firms who have responded positively and use this as tool to bridge a gap. However, it only works when the SME recognises that he or she needs that support.
Beyond skills and capabilities, there are a number of other factors to bear in mind. Whilst the role of the Head of FCC remains the pinnacle in many candidates’ careers, the role comes with significant accountability and potential consequences. It is therefore imperative for Heads of FCC to not only have the full support of senior executive management, including from the CEO.
Whilst it is still rare for Heads of FCC to report to the CEO, a minimum requirement should be for Heads of FCC to have direct access where necessary. Given the personal liability at stake, having the CEO and senior management fully on board and supportive of the FCC mandate is essential. This also means investing in the function and recognising its importance as a function with specialist knowledge.
Merging reporting lines between second line of defence functions is a current trend in the industry and whilst there are many valid reasons for doing so (as outlined in 6 above), many are concerned that such changes may diminish the effectiveness of such specialist areas.
Regulators and Law Enforcement agencies are looking for heads to roll in addition to imposing fines and penalties when things go wrong. Such severe implications must prompt candidates to really question not only if this is the role they really want but whether the role has the full support from the CEO and senior management and adequate funding and resources to execute the Financial Crime programme effectively.
8 – What advice would you give to those looking at future careers in Financial Crime Compliance? HT/JS: Certainly, Financial Crime Compliance remains an inviting role, particularly in Banks, which pay well and are much more open to a broader set of skills and capabilities than ever before. However, expect hard work and long hours. Promotion is not about the number of years in post but about the ability to genuinely impress through strategic thinking and execution. Also, at the more junior levels, starting salaries have come down, from days when it was passable for relatively junior staff to earn US$100,000, these figures are now a thing of the past. It is common for FCC personnel to move around amongst competitors, which can be a positive development to see how others approach problems differently. However, the grass is not always greener and with changes in FCC organisations, including at leadership level, this creates instability lower down. Three tips for future success would be to build a strong network across the industry, try to gain expertise in as many areas of FCC as possible, and resist the temptation to stick as an SME in only one area. Lastly, whilst the work can be hard and stressful, try to enjoy and inspire others, as there are few roles in banks quite as rewarding when you are at the coalface fighting financial crime and making a real difference.
About Sheffield Haworth:
Sheffield Haworth is an executive search and talent consulting firm that aims to deliver the best talent and up-to-date industry information across the globe in the Financial Services, Business & Professional Services and Digital & Technology sectors.
For over 25 years, our teams have supported clients with Executive Search and more recently Consulting Solutions and Talent Advisory, combining a continued successful track record with an ongoing commitment to diligence, integrity and innovation. The business has 10 offices throughout the Americas, Europe, Middle East and Asia Pacific regions.
For more information, visit: www.sheffieldhaworth.com.
Helen Tudor, Managing Director, BPs: – Helen focuses on Partner level Executive Search in management consultancy and Professional services, specialising in Financial services, Government & Defence, Telco, Consumer and Retail sectors. She covers Strategy, Operations Transformation, Technology & Digital, Organisation Design, Human Capital, Talent and leadership.
She works with the Big 4 consultancies, strategy houses, systems integrators and challenger consultancies. Helen has extensive UK and European experience. She covers Partner, VP and Director level positions, as well team acquisitions or team builds. Before joining SH, Helen was Managing Partner of BLA Search, a specialist management consultancy headhunter, having joined as a consultant and then moved into partnership and ownership. She started her career in a global recruitment company in managerial roles. Helen holds a BA in English Literature from the University of Manchester.
James Strover, Director, Corporate Officers
James joined Sheffield Haworth in 2010 and executes retained Risk, Compliance and Regulatory mandates globally across corporate and investment banking, retail banking, asset management, sovereign wealth funds and wealth management.
Previously, James was part of the Financial Services practice at Odgers Berndtson, covering senior-level mandates across Risk and Finance. He began his career in executive search at Merrill Lynch as part of its in-house executive search practice working across a variety of disciplines.