IT Programs that use logic and rules to monitor transactions can only achieve so much. To make transaction monitoring more effective frontline employees need to be the eyes and ears of the firm supplementing the capabilities of the IT programs.

However, there may be a conflict of interest which might disincentivize employees from reporting suspicions. So how does a firm motivate employees to discharge this responsibility? Relationship managers or RMs are a good example of client facing frontline employees who see and hear things in the course of interacting with their customers. If they see or hear something unusual, it should be escalated and investigated in the same way a system generated transaction monitoring exception is handled.

The problem is that an investigation and potentially an exit from the client relationship will make it harder for the RM to meet annual revenue targets. The RM has a natural incentive to keep quiet and say nothing when a client's behavior is suspicious or unusual.

So how can a firm overcome this natural incentive and make relationship managers enthusiastic participants in the firm's effort to manage financial crime risk? One way is to make variable pay dependent on non-financial targets, such as risk management, key performance indicators or KPIs, rather than on revenue KPIs alone. The split could be 50 50, meaning half of the RMs bonus is tied to risk management targets, and the other half is tied to traditional revenue targets. If an RMS customer were indicted for a criminal offense and the firm later discovers that warning signs were missed and dirty money has passed through the customer's accounts, these events would be expected to drive the RMs bonus down. Apart from non-financial KPIs, there are other essential components to a strategy that seeks to motivate frontline employees to be effective risk owners. Tone from the top signals what is important to the firm's senior managers and owners. It directs the efforts of employees and can be used to signal that rewards will flow to employees who deter, detect, and prevent financial crime.

Huddles and case sharing are helpful in making managing financial crime risk a common purpose. And in sharing the lessons learned from real cases, case studies may involve actual financial crimes as well as close calls. In such case studies, the identities of the customers involved in the cases should be concealed.

Financial crime risk champions, rewarding risk management performance is possible not only through bonus payments, but also through other types of recognition. An employee's contribution to the risk management effort may be recognized and celebrated by nominating them to the financial crime risk champions from time to time.