AML Compliance can also be a Sales Tool

How one bank turned lemons into their own personal brand of unicorn juice

The Gibraltar Private Bank & Trust was slapped with a $4 million fine by FinCEN for BSA violations in 2016. After a long and hard journey to remediate their compliance, they finally had a top notch AML system in place. But what was their value proposition and how were they going to make up for all that they had lost in the process?

The Ponzi scheme that slipped through the cracks

The savvy Bank was unable to identify and deter the funds from a Ponzi scheme being funneled through their accounts in 2009. Guided by Florida attorney Scott Rosenstein, the perpetrators moved part of $1.2 billion in laundered money through the system. Having occurred so close to the crisis of 2008, the resultant actions were swift and heavy causing the Bank to change senior management and put their faith in new executives.

A complete overhaul of the workforce

To keep up with heavy scrutiny from regulators, the staff strength grew rapidly to 278 FTEs, 12% of whom were were assigned to the remediation project. This massive hiring spree would have inflated costs further due to training and development programmes.

Additionally, Gibraltar also pursued Sara Christie in 2014 to be the new head of the anti-money laundering division.

The new value proposition

Once the dust settled, CEO Angel Medina decided that all the troubles would become a competitive advantage for the organization. He turned what was a compliance matter into a sales tool. Now the bank seeks affluent, high-risk clientele that no other bank will service under the current regulatory environment.

What he calls a very expensive lesson in survival and resilience, is a journey most institutions would choose not to take.

Set your sights on the right pain points

While KYC and CDD are the backbone of a strong AML compliance program, SARs and effective investigations are what ultimately determine deterrence of fraud.AML teams must be vigilant in identifying deceitful transactions, raising SARs, and reporting alerts to the right authorities.

When working with wealthy individuals, the questions get tougher, and the answers murkier. However, when it comes to the bottom line, those wealthy individuals are irreplaceable. You need to find your niche and push hard to compete in an increasingly regulated market.