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Staffing assessments: Why financial institutions should evaluate AML staffing needs now

Terri Luttrell, CAMS-Audit, CFCS
August 10, 2023
Read Time: 0 min

Evaluate AML staffing for future needs now 

Given ongoing staffing challenges for AML teams, now is the perfect time to analyze current staff levels at your financial institution. 

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Takeaway 1

Maintaining adequate staffing levels is crucial for financial institutions, especially in areas subject to high regulatory scrutiny, such as BSA/AML and fraud functions.

Takeaway 2

The effects of remote work trends and increasing digital usage mean employee turnover remains a significant concern, so evaluating staff coverage is key. 

Takeaway 3

Whether conducted internally or through a third party, staffing assessments are essential to maintain a robust AML and fraud program in the dynamic landscape.

Current trends

Employee turnover is significantly impacting the financial industry

The last few years have been filled with staffing challenges for many industries, and the financial services industry is no exception. Nevertheless, maintaining adequate staffing levels is crucial for financial institutions, especially in areas subject to high regulatory scrutiny, such as Bank Secrecy Act /Anti-Money Laundering (BSA/AML) and fraud functions.

A comprehensive staffing assessment, which evaluates human resource needs for the bank or credit union, is an effective way to strengthen your financial institution's culture of compliance. It demonstrates a commitment to adequate compliance resources using data-driven evidence.

Financial institutions still face staffing challenges

Financial institutions continue to grapple with the effects of remote work trends and increasing digital usage. Employee turnover remains a significant concern for the financial sector, with many companies offering remote work options that create increased competition in the industry.

Crowe’s most recent Bank Compensation and Benefits Survey found that banks saw a sharp rise in talent turnover for nonofficer employees in 2022, even as talent remained stable at the officer level. “The turnover rate for nonofficers reached its highest levels since 2019, increasing from 16.2% in 2021 to 23.4% in 2022,” the firm said. “This trend occurred despite the average salary for these positions increasing by 5% in 2022.”

Considering the impact of these ongoing workforce changes, financial institutions must analyze their current staffing levels and anticipate the associated risks of potential employee departures.

Be prepared

Staffing assessments are recommend for your institution

The Financial Crimes Enforcement Network (FinCEN) emphasizes the significance of devoting human and technological resources to ensure a robust BSA/AML program. In an advisory on promoting a culture of compliance, FinCEN noted that devoting insufficient staff or other resources to the BSA/AML compliance function may result in:

  • Alerts not being reasonably designed to capture appropriate risks
  • Alerts being dismissed improperly
  • A backlog of alerts that may result in the untimely reporting of suspicious activity.

The impact of AMLA regulations

Ensuring adequate staff will become even more critical for financial institutions as a result of the passage of the Anti-Money Laundering Act of 2020 (AMLA) as part of the National Defense Authorization Act. FinCEN will be issuing regulations and guidance throughout 2023 and beyond. These AMLA Act of 2020 requirements will inevitably impact the AML work effort for financial institutions. Each institution will need to assess human resources to account for existing workloads and any additional duties that may arise due to new guidance.

Tailored staffing needs for AML programs

Staffing needs for anti-money laundering efforts vary based on each financial institution’s size and risk profile. Smaller, low-risk institutions may have a single compliance officer overseeing all compliance functions, including BSA. Conversely, larger institutions or those serving higher-risk customers may require a more extensive AML staff. Conducting a staffing assessment will help identify the specific needs of your AML program to ensure adequate coverage for all responsibilities and prevent potential regulatory penalties resulting from insufficient resources.

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How to perform a staffing assessment

To perform a successful staffing assessment, follow a detailed and thorough process. Abrigo's publication for AML professionals, "Guide to a Successful Staffing Assessment," provides step-by-step instructions for various essential categories, such as:

  • Conducting risk assessments
  • Updating policies and procedures
  • Transaction monitoring
  • Enhanced due diligence reviews, and
  • OFAC screening.

Analyzing data and tracking volumes for each category will help determine the correct number of AML employees needed to meet regulatory expectations.

Other considerations for staffing

When evaluating your AML staffing levels, be prepared to address non-routine aspects of AML and fraud requirements. Updating policies and procedures to align with the FinCEN AML Priorities will require staff time and attention once further guidance is released. Additionally, anticipate an increase in fraud, including cyber fraud, which is expected to continue to rise, and identify related BSA/AML staffing needs.

Mitigating risk and ensuring continuity

With the increase in employee turnover seen in recent years, particularly in critical roles like BSA Officer and AML and fraud investigators, your regulatory risk may be impacted. Consider comprehensive AML succession planning and cross-training to mitigate the risk of losing critical team members. Outsourcing solutions offered by AML consulting firms may also be helpful to fill immediate staffing gaps and ensure continuity in essential functions.

Understanding importance

Don't wait, start planning now

The AML and fraud industry is set to undergo its most comprehensive reform since the signing of the USA PATRIOT Act two decades ago, due to the passage of the AMLA. Though the specific effort required from financial institutions is yet to be determined, being prepared to handle related changes is essential. Regulators prioritize having a sound program and sufficient staffing, so sharing your staffing assessment with them is crucial and demonstrates your commitment to compliance.

Prepare for comprehensive AML and fraud reform

Financial institutions should prioritize a staffing assessment process to ensure they are well-prepared to meet regulatory expectations and handle the challenges. Comprehensive staffing assessments help build a strong culture of compliance by anticipating potential staffing gaps and demonstrate the institution's commitment to regulatory compliance. Whether conducted internally or through a third party, staffing assessments are essential for financial institutions seeking to maintain a robust AML and fraud program in the financial services industry’s dynamic landscape.

Perform a staffing assessment at your institution today.
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About the Author

Terri Luttrell, CAMS-Audit, CFCS

Compliance and Engagement Director
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

Make Big Things Happen.