Julian Bentley, Head of Risk & Compliance at Alderbrooke, a leading Executive Search and Cultural Diagnostics firm.

The banking industry has endured an enormous amount of scrutiny in recent years, yet regulators and organisations continue to offer more policy and benchmarks to address ongoing issues and failings. The Financial Reporting Council is the latest to announce a new set of guidelines, which look at board succession planning as a way of strengthening the link between leadership continuity and performance.

Nowhere is this link more important than in the area of financial crime. Over the past few years, many banks have hired large teams specifically to fight white collar crime; in fact, some of these have swollen to around 5,000 employees. At the same time, some boards seemed willing to offer blank cheques to ensure that those stepping in to lead these departments were the best in the business and had the expertise to fulfil all the elements that the role entailed.

This on-going investment in the fight against financial crime is to be welcomed, clearly, but the cracks in these teams are already beginning to show. This unsustainable growth of these divisions has resulted in serious inconsistencies in team culture, as well as a distinct lack of loyalty at the top, which is putting an enormous strain on leadership continuity.

The problem is that many banks are failing to instil a sense of ownership and longevity in their heads of financial crime, which means that the temptation of a large pay package is difficult to resist. As a result, staff turnover at the top level is dangerously high, leading to instability in the rest of the team.

The head of a financial crime team also has an incredibly wide remit, which includes fighting fraud, anti-money laundering, identifying criminal activity, pinpointing future risks, staying up to date with rapid technological developments, remaining compliant and more. As such, this is a role for an experienced, dedicated specialist who can implement and execute strategy across a large team.

However, given the skills gap that currently exists in this area, many banks are struggling to find these individuals, and are therefore either promoting internally – often before the individual is ready – or filling these gaps without  undertaking appropriate due diligence. As a result, leadership roles are often being filled by those who cannot manage the breadth of the role. These individuals consequently become ‘fire-fighters’ who are left to deal with the issues that were already in existence when recruited, rather than developing a strategy for the future.

Together, the lack of ownership and high-level ability is leaving financial crime teams without true leadership. Some of these 5,000-strong teams are therefore being run without direction or with regularly changing commands from the top, as the focus or individual leaders are changed.

Processes, too, are changing regularly or not being properly pursued, with red flags and concerns being raised, but often followed by a resolution that is too slow or insufficient. This combination of events is causing serious gaps in the system, which means that very real threats can slip through the net.

Financial crime departments are meant to act as a strong barrier and protector for the bank and its clients, but what should be a formidable wall of security is being weakened by a dearth of skills and experience at the top. As such, now is the time for banks to address a number of fundamental issues in their individual crime teams.

For a start, time must be taken to properly process applications for senior leadership positions and a thorough due diligence process needs to involve more than just a CV check and an interview. Background checks, industry references and cultural assessments must become the norm for those looking to take on a role that is so fundamental to the future and security of the bank.

Additionally, by analysing the culture of the existing financial crime team and comparing this to the more steady and secure areas of the wider banking business, firms can begin to gain a more holistic view of their cultural strengths and weaknesses. This way, organisations will be in a stronger position to map out the type of leader that is required, how many staff should be recruited and at what level, and how this can be sustainably achieved.

Unless banks take steps to address these issues now, the consequences could be catastrophic. Failing to implement a long-term security plan, managed by a long-serving and inspiring leader and executed by a sustainable and engaged team, could leave banks vulnerable to a wide spectrum of financial crimes, leading to substantial losses in revenue, steep fines for non-compliance and irrecoverable reputational damage.