It’s a matter of trust – or is it?

Yes, this is a follow-on to my “Who does what” post – because there was an element I wanted to treat separately.

A lot of the matches that an Operations or Compliance staff review are pretty straightforward. There are often name elements that just don’t match, so it’s easy to say that the listed entity doesn’t match the data.

Can you, at a minimum, trust lower-level staff to do that sort of triage? Getting rid of the bulk of potential matches by using someone other than the Chief Compliance Officer or Legal Counsel may be a good, simple, easily defensible trade-off of operational cost vs, regulatory risk.

Does that staff have to be Compliance/Legal staff, or could it be parceled out to the appropriate business unit? Money Transfer Operations staff might be more knowledgable about their payments, after all, and Human Resources is probably, from a legal standpoint, the better place to review employee screening results.

Beyond the patently obvious false positives, can you trust others with some of the day to day review work? Might Documentary Credit know about transaction-specific licenses that are relevant to their clients’ businesses, sparing Compliance/Legal from that spadework?

And let’s say you don’t inherently trust other departments or lower-level Compliance staff with certain final decisions. Could they do the research for you? That way, when it hit the Compliance Officer’s work basket, the bulk of the work would have been done, and only the decision-making would be left. And, in fact, had some data not been gathered, the item could be referred back so the other staff members could go out and retrieve it.

Mr. Watchlist is a fan of getting things done in the most cost-effective way, as long as it’s actually effective. If other, closer to the business and/or more inexpensive, staff can perform the same function as a highly paid Compliance or Legal officer, it would seem to make good economic sense to utilize them in that way.

An added bonus: involving less-knowledgable staff in the day to day review work builds their knowledge base and your firm’s compliance “bench” – some of those folks might want to work in Compliance or Legal one day, and involving them on an ongoing basis will enable them to have that career option, and make your firm’s Compliance capabilities more broadly based.

An added “D’oh” – this is not just a maxim for watchlist screening, or even just for Compliance activities. Spreading the wealth, especially across functional and/or business lines, adds to organizational strength – as Martha Stewart would say, “it’s a good thing.”