What Is Culture And What Does It Mean?

Published date31 January 2023
Subject MatterFinance and Banking, Government, Public Sector, Money Laundering, Fund Finance
Law FirmBaker & Partners
AuthorBarry Faudemer

The Wolf of Wall Street film or the Netflix series on Bernie Madoff provide entertaining and graphic examples of where culture and conduct spiral out of control leaving devastated employees and victims in their wake. Here we discuss how to achieve a healthy AML/CTF/CPF culture and what the expectations of the Regulator are likely to be.

What is Culture and what does it mean?

The Cambridge Dictionary defines culture within the workplace as 'The ideas and ways of working that are typical for an organization, and that affect how it does business and how its employees behave'.

There are many words that could be used to describe a firm - competitive, quality-focused, a community, ethical, one of entitlement, rewards risk-taking and they are all descriptive elements of a firm's organisational culture - 'how things are done in this company'.

Culture can be summarised as those assumptions and/or beliefs that are common in an organisation and help predict/dictate how people will/are to behave.

In the case of Bernie Madoff, lying to customers and fabricating information became the norm endorsed by those around him keen on preserving their bonus. Effectively any culture of ethical behaviour was brushed to one side. The impact on employees and indeed Madoff's own family was catastrophic.

Through bitter experience Regulators have identified that the culture within a firm has a direct impact on the strength of the anti-money laundering controls within a business, and hence Regulators interest in inviting businesses to test the strength of their culture. Historically, some businesses have responded by changing job titles, for example 'Director of People and Culture', signalling a renewed focus on culture, but taking action to measure how their firm's culture is actually progressing is often neglected.

It is said that culture influences conduct but conduct also influences culture. A dominant and bad-tempered director is unlikely to promote a healthy culture within the workplace.

The challenge and difficulty with culture is that it cannot be changed without significant effort by all involved and it can take time for change to become embedded within a business. Unfortunately, a strong and positive culture can be quickly destroyed and those that are responsible will have little or no interest in measuring or promoting a positive culture.

Why does having a healthy Culture matter so much?

The blunt answer for a Financial Services Business (FSB) is to avoid regulatory sanction...

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