Especially in the Cayman Islands, where compliance professionals have to do twice as much only to be considered half as good by the rest of the world, Karen O’Brien, managing partner at Global Compliance Solutions, told conference attendees in her introductory words, “We need to do more and we need to do it better”.

Echoing the conference theme, Langston Sibblies, the deputy managing director of CIMA, acknowledged that much work remains to be done but also outlined recent improvements to the regime in Cayman. Sibblies specifically mentioned the strengthening of CIMA’s independence and enhancements to insurance supervision with the new Insurance Law. The Peer Review Group Report in connection with the Global Forum’s assessment of the local regulatory framework supporting the exchange of tax information also highlighted many of the recent improvements, Sibblies said.

A motivational speech by psychologist Bill Crawford on the first day of the two-day event set the tone for one of the underlying themes of the conference: The difficulties in implementing a compliance programme and establishing a compliance culture. Crawford tackled the issue from a psychological angle in terms of how to get others to “get it”, illustrating a communications technique that could also be applied to other aspects of life.

By identifying whether other people’s responses are drawn from the upper part of the brain, the neocortex, or from the limbic system or brainstem, all the pitfalls of a “trapped conversation”, where the rejection of an idea leads to frustration and subsequently even greater resistance, can be avoided, he said. 

Juan Llanos, director of compliance with Unidos Financial Services, broached the topic of how to implement a compliance culture within an organisation, demanding that a culture must first be established by a company’s management leading through actions and not just words. This must be followed by having the right people in place to adopt this corporate culture “through assimilation”, systems that support this process and communication.

Kem Warner went into greater detail by outlining how to implement a whistleblower policy, before delegates heard from the personal experience of an actual whistleblower. Martin Woods, a former anti-money laundering and compliance officer with Wachovia, blew the whistle on suspicious sequential travellers cheques from Mexican currency exchanges. He spoke of his troubles in getting regulators to listen and the harassment he received from his own employer, who sued him. Ultimately Wachovia was fined $160 million for money laundering in what Jeffrey Sloman, the US Attorney for the Southern District of Florida, called “Wachovia’s blatant disregard for our banking laws, [which] gave international cocaine cartels a virtual carte blanche to finance their operations.”

However, the presentation did raise serious questions about both the viability of whistleblowing, the willingness of some financial organisations to really enforce strict due diligence and the effectiveness of fines as a deterrent.

Llanos, in his presentation, mentioned statements he heard from compliance officials at large financial institutions in the US, who spoke about their problems in convincing senior management to appropriately fund compliance programmes. Some organisations have even established internal funds for future potential fines to deal with any infringements and failures, rather than improve their internal compliance processes, he noted.

At least in the US, however, change might be on the way with the Dodd Frank Act, which recently introduced financial rewards for whistleblowers of between 10 per cent and 30 per cent of the recovered value by the SEC in each case, delegates heard.

Woods’ presentation also brought home the need for effective anti-money laundering and compliance systems, as in the case of Mexico’s drug war not only involving money, but also the fact that human lives are at stake.

The consequences of lax anti-money laundering mechanisms with regard to corruption were highlighted by Robert Palmer, a policy analyst and campaigner with Global Witness. Palmer published a report in October 2010 on how some British banks were complicit in Nigerian corruption. According to Palmer, British and French banks accepted millions of pounds from Nigerian politicians.

The Global Witness report found that Barclays, HSBC, RBS, NatWest and UBS all held accounts for two former Nigerian state governors, Diepreye Alamieyeseigha of Bayelsa State and Joshua Dariye of Plateau State, although public officials in Nigeria are prohibited from holding foreign bank accounts by the Nigerian constitution. The accounts enabled the politically exposed persons to launder corruption proceeds through the UK and spend the funds on properties and luxury items.

If that was not enough to warn banks that dealing with politically exposed persons exposes financial institutions to a reputational risk, Dan Wise, a partner with the BVI firm Martin Kenney & Co,, gave more examples of the dangers that PEPs represent in his presentations. Rather than to focus on the client’s political profile, compliance professionals should monitor the history, background and trading patterns for inconsistencies, he advised.

Delegates were given other red flags from recent fraud cases by speakers from US Homeland Security, Cayman liquidators and Krys & Associates.

The penultimate presentation by Cayman’s Senior Crown Counsel John Masters, who described potential consequences for those convicted of financial crimes in line with the Proceeds of Crime Law, were contrasted by the story of John Borbi, a US investment adviser who was convicted of fraud. When a general stock market downturn wiped out previously profitable investments, Borbi attempted to cover the losses of certain clients with funds from other clients, who were less inclined to notice. Yet, Borbi’s scheme was uncovered and he ended up in prison, divorced and without money, albeit a reformed character.

Energetic and communicative, Borbi appeared to confirm John Master’s statement that you will never meet a fraudster you don’t like. “You will never find a rude conman. They are charismatic, they will make you laugh, they will entertain you,” Masters said.