With the recent headlines concerning Mr Trump’s tax arrangements and Mr Johnson’s awarding of government contracts to chums, you can imagine that the issue of morality has been much on my mind. I come from mixed stock: one half of my family was capitalist to the core while the other half spent most of their time on good works and community projects. No, my parents’ marriage did not last long. And now I find myself something of a moral mongrel: I make my living in the financial sector, but from telling them how to be law-abiding, altruistic citizens. But again and again I wonder how we can make AML (and other issues, of course, but everything else is way less interesting) something that people want to do rather than something they have to do.
In an article earlier this month in the Economist, columnist Bartleby made some helpful observations about cheating, fraud and other morally suspect behaviour within organisations:
- “Individuals are not very good at assessing the purity of their own motivations” – on the other hand, we are pretty expert at what are known in our household (thanks to an enduring obsession with the movie “The Big Chill”) as “juicy rationalisations”, whereby we are remarkably creative when presenting our own decisions and actions as morally defensible
- Within companies, “a culture of cheating can spread quickly” – or, as we like to say in the worlds of corporate governance and AML, it’s all about “tone from the top”
- “Individuals are more likely to lie, or commit fraud, when they are set excessively difficult and specific goals” – now, I have long railed against the bonus culture, where a proportion (sometimes a significant proportion) of people’s pay is based on performance. In the sales side of finance, this can (I believe) lead to people taking on business that they would otherwise reject, in order to “make the target”. Moreover, as Bartleby puts it so well in reporting the findings of a 2015 study by academics at Columbia and Harvard business schools, “under pressure, people do not efficiently analyse information that could otherwise keep them on the straight and narrow”.
Now I don’t often resort to capital letters to make a point but today I shall: we need to GIVE PEOPLE TIME AND SPACE TO BE ETHICAL. One tactic suggested by those academics would work well in the AML environment: if you signal clearly that ethical issues may arise, people are more likely to take them into account when making decisions. So perhaps a little reminder about your corporate ethics code of conduct at the top of your take-on/onboarding paperwork will pay dividends – apparently even just mentioning the word “ethics” has a positive effect. Ethics! (Has it worked?)