As Australia prepares for its own Tranche 2 AML/CTF reforms, it's valuable to reflect on the lessons learned from New Zealand's experience, particularly in the real estate sector. Here are some key insights around hiring; common mistakes, and effective solutions to help you avoid the same pitfalls.
Hiring Someone Too Junior
A common, early mistake was assigning the AML Compliance Officer role to junior staff, such as receptionists or junior administrators. The level of responsibility involved in these positions was grossly underestimated, leaving these individuals out of their depth. The most common feedback from regulators in the first two years was that they did not have the right person in the role, leading to a cascade of compliance issues.
Hiring from Financial Services
Real estate companies often recruited people from the financial services sector, hoping their AML/CTF experience would translate. However, the pace and nature of real estate proved a challenging transition, resulting in slow adaptation or high turnover. The cultural and operational differences turned out to be a significant barrier.
High Turnover
Due to hiring mistakes and inadequate resourcing, the initial years saw massive turnover in these roles, which hindered progress for new reporting entities. Dealing with vacancies or allowing new hires time to adjust created inconsistency and, in some cases, led to costly remediation efforts. The first 12 months alone saw nearly 60% turnover of Compliance Officers.
Hiring from Within the Industry
As AML experience in industry was rare at the time, successful hires came from backgrounds such as operations management, or even former sales agents who excelled at the administrative side (and maybe weren't the best sales people). A background in property studies also proved to be an advantage, as it helped candidates grasp the nuances of the industry.
Hiring from AML Service Providers
Candidates from KYC/CDD service providers or AML consultancies adapted more smoothly than those from financial institutions. Despite lacking direct industry experience, their exposure to a range of industries as a service provider equipped them with adaptability for the different dynamics and compliance needs unique to real estate.
Prioritising the Right Personality Traits
Beyond qualifications, certain personality traits proved CRUCIAL for success in these roles. Resilience, a willingness to learn, and the maturity and ability to maintain authority while not always being the most popular person in the room. Driving a culture of compliance among sales agents is no easy task, so having a pragmatic approach, coupled with a solid understanding of the industry’s commercial realities, made a significant difference.
