A job in forensic accounting and witnessing the impact of money laundering on a revered financial institution launched Brett Manwaring’s career in financial crimes risk management (FCRM), with a focus on anti-money laundering (AML), financial crime prevention, and regulatory matters. After serving as a compliance officer in the Enterprise Financial Crimes Compliance group at JPMorgan Chase & Co., he joined K2 Integrity in 2012. He has helped clients work through dark days, but he sees a bright future for banks as they work to improve their AML compliance and stop financial crimes.
What drew you to AML? What sparked your interest in that area?
Sometimes the work chooses you, and I think that was true for me. I started my career in the forensic accounting practice at KPMG, where the focus was not on traditional audits but on advisory and monitorship services—such as identifying fraud, waste, and mismanagement in healthcare and on construction projects, and corporate espionage and theft.
Back in the late 1990s, AML was a sub-offering, but between 1998 and 2001 that changed. The nature of AML evolved from a check-the-box, reactive measure to a proactive step required of all financial institutions. I got my feet wet in AML at KPMG and was working at Riggs Bank when it received its consent order from the U.S. Comptroller of the Currency following investigations into money laundering and deficiencies in the bank’s AML compliance program. That was an eye-opener. Riggs was one of the oldest and largest banks in Washington, D.C., with a storied history of serving presidents and members of Congress, and its flagship branch was directly across the street from the U.S. Treasury.
After 9/11, AML stopped being a job and started being a career. My interest had always been due to the gravity of the work we were doing, and as a resident of New York City, I saw how vulnerable institutions are. Since 2001, after the USA PATRIOT Act was enacted, 100% of my career time has been devoted to AML.
What do you enjoy most about your role at K2 Integrity? What do you look forward to each day?
I really enjoy interacting with the team. I like the technical challenges, the occasional personality challenges, and figuring out the best solutions for our clients. Another element I enjoy is working with the team to identify training opportunities so younger members can develop their subject-matter expertise and provide real value. I look forward to watching members of the team develop. That’s super gratifying for me.
Where do you see financial crimes compliance heading? What will financial institutions need to do in the future to ensure compliance with AML regulations?
Live transaction monitoring is the crux of AML right now. Rules such as Regulation 504 from the New York Department of Financial Services, which requires annual certification, put the emphasis on transaction monitoring systems. Banks are being highly reactive at the moment, but in the future they will need to shift to a more proactive approach. Tools such as behavioral analytics and artificial intelligence can bring efficiencies, but these are long-term aspirations for most institutions. If banks get a better handle on their data and implement robust reporting and analysis, they will be surprised at how quickly they can dramatically improve compliance.
How have financial criminals’ strategies and tactics changed when it comes to money laundering? For example, how are they utilizing the gaming industry and non-bank financial services entities?
As technology advances, access to money speeds up. Combating terrorist financing (CFT) is one aspect of what we do with AML, but other things find their ways into financial institutions as well, such as human trafficking. Illicit funds from drugs have always been present. Gaming and sportsbooks, in particular, represent a real vulnerability. Sportsbooks aren’t thinking holistically about AML, even though the regulations still apply to them. If criminals wanted to launder money and use multiple states to do it, sportsbooks could be vulnerable. Sportsbooks are in the same situation that banks were in before 9/11. They need to invest and build up their AML programs. While some are better than others, few are taking proactive steps to make their programs cutting-edge. Sometimes, unfortunately, it takes an industry-shaking event to inspire change.
How has your career influenced your outlook on the basic goodness of people?
Working in FCRM hasn’t jaded me, but I know that in certain situations people can be vulnerable, and financial institutions are no different in that regard. Vulnerabilities to criminal activity exist—a small segment of people will choose to take advantage of opportunities they identify. Those opportunities are what we are trying to root out and safeguard against through comprehensive compliance and risk management frameworks. Part of those frameworks involves knowing who we’re dealing with. Institutions need to abide by Know Your Customer regulations—we make similar decisions on a personal level every day.
As criminals become more sophisticated, and the volume of FRCM work multiplies, how do you keep yourself and your team focused?
One of the skills we’re trying to cultivate with our team is taking the tasks for an institution and applying those to how we would make decisions. It’s easy to overcomplicate things and get lost in the transaction flow. But it’s possible to spot suspicious activity by asking yourself, “Would I do this on a lesser level? Does this make sense?” Letting transactions speak to you on a simple level goes a long way.
It’s also important to remember the downstream and upstream impacts. How is what we are doing impacting the compliance process—and the institution—as a whole? That helps us understand and stay focused on the big picture.
What is your advice for someone starting a career in the compliance space?
This industry changes very fast; what is relevant today will evolve tomorrow. It is a best practice to try to stay up to speed on the latest developments so you can be a trusted advisor to your clients—whether you are in the role of a consultant or in-house at a financial institution, helping the broader business understand compliance. Also, in any industry but especially in financial crimes compliance, make it a practice to overcommunicate. You don’t want your name to be the one on the sticky note on your manager’s desk, reminding them to follow up with you. Communication is a good tactic for managing up, and demonstrates you’re thinking of the impact your work is having across the board.