But I can get it cheaper…
One of the fascinating pieces of business is the cost of goods and services, with there often being several options at several prices. We face this issue frequently, because the work we do at LUBRINCO often seems similar to what others offer. But is it in fact the same?
A good example of this is independent testing and review of AML programs, which is mandated by law. There are a lot of firms that do this, and many of them are extremely competent, and cost less than we do. In fact, however, we do not do independent testing and review of AML programs per se. Rather, we do independent testing and review of AML programs where there is a concern regarding possible regulatory action, and help when a regulatory action has taken place.
Should this make a difference in your thinking? Yes. If all you want is to be able to demonstrate a bare minimum of compliance, then we would suggest that you should definitely not hire us: You can get the job cheaper elsewhere. On the other hand, if you want to make sure the regulators know your firm is actually doing the proper job within your AML compliance program, rather than merely giving the task lip service, we should be among your first choices. And if you have actual concerns about a possible regulatory action, and avoiding them, and addressing them, then we should be at the top of your list.
In a recent case, a company solicited two bidders for independent AML program testing and review. One firm provided a bid for about $6,000 for the job. The other was an estimated $40,000. The company accepted the higher bid. The evaluation produced a number of troubling areas, all but one of which was rectified. In reviewing the work product provided by the independent provider selected, the regulatory examiners found that the program review identified and remediated all of the issues identified except for the one minor issue that was then still outstanding at the time of their examination There was a minor action over the one outstanding issue, which was subsequently dealt with.
Was the investment of the extra $36,000 worthwhile? Well, it saved the institution a huge amount of additional time, money, and grief. Based on this, we would conclude that it was definitely worth it.