WASHINGTON The kings of Wall Street used to be the traders and investment bankers who said yes to big deals and big trades, but today's power brokers increasingly are the compliance officers who quite often say no to risky proposals.
As the U.S. government steps up enforcement of anti-money laundering laws, it has created a red-hot market for compliance officers, who oversee a bank's systems that prevent it from violating regulatory requirements and monitor transactions for any suspicious activity.
According to recruiters, the demand for compliance expertise exceeds the pool of qualified professionals, forcing banks to poach from each other - sometimes by offering to double salaries and other perks like flexible work schedules.
JPMorgan Chase & Co (JPM.N), which has announced plans to improve compliance across the bank as it faces a bevy of regulatory investigations, has more than 300 job openings for anti-money laundering professionals, according to its website. That is the equivalent of hiring an entire compliance department for many other financial institutions.
"There are not a lot of high-caliber people left in the marketplace," said legal recruiter Jason Wachtel, who runs the search firm JW Michaels & Co.
Wachtel said he knows of a "very big bank" that offered to pay more than $1 million to a potential new director for its anti-money laundering program, a sum that would have been unheard of a few years ago. The candidate ultimately rejected the offer, Wachtel said, in a move that highlights the extent to which experienced officers command the upper hand.
Wall Street's focus on compliance has been years in the making. Much of it dates back to October 2003, when a provision of the Patriot Act that required financial institutions to verify the identities of certain customers went into effect. Banks were then forced to bolster so-called AML (anti-money laundering) compliance departments to monitor their customers and transactions.
But it was only in recent years - after the 2008-2009 financial crisis - that regulators and prosecutors have intensified a crackdown on the flow of money tied to suspected terrorist activity, drug lords and tax evaders.
Enforcement actions have stacked up across the industry, with anti-money laundering settlements, including some sanctions violations, spiking to total $3.5 billion in 2012, from $26.6 million in 2011, according to the Association of Certified Anti-Money Laundering Specialists.
That jump includes last year's $1.9 billion blockbuster fine on HSBC (HSBA.L) for its failures to stop hundreds of millions of dollars of drug money routed through it from Mexico.
Some compliance officers speculate the increased enforcement was driven in part by the public perception that financial institutions were not held sufficiently accountable in the aftermath of the crisis.
"Compliance is very hot," said Jack Kelly, a legal recruiter who specializes in placing such professionals.
"It just takes one or two firms to really get hit hard, get very negative media attention and pay heavy fines, and it's a wake up call not just for them but for all the other firms."
Recruiters say there has been a hiring spree.
TD Bank (TD.TO), which was fined $52.5 million last month over anti-money laundering lapses, hired Michael Bowman from Rabobank RABO.UL to run the Canadian bank's sanctions and anti-money laundering operations.
In August, Barclays Plc (BARC.L) hired Morgan Stanley's (MS.N) anti-money laundering director, Tim O'Neal Lorah, to head financial crimes compliance.
Western Union Co (WU.N), which paid $94 million to resolve a 2010 money laundering settlement with state authorities, hired senior JPMorgan lawyer Barry Koch in May to serve as chief compliance officer.
Other banks are even turning to big names outside the compliance industry. Standard Chartered Plc (STAN.L), which paid $667 million last year on charges it violated U.S. sanctions laws, hired the former top federal prosecutor in Connecticut, David Fein, as the bank's general counsel last month.
Fein's experience does not include much banking expertise, but he did spend time at the U.S. Department of Justice and in the White House when Bill Clinton was President.
Money-laundering compliance has not traditionally been a hot career path, since such risk departments were often ignored and sidelined when their demands clashed with the parts of banks that bring in business.
There are no specialized degrees required for compliance officials, who were typically repurposed from other divisions of a bank. But as demand picked up, candidates with degrees from reputable law schools started moving into the field, recruiters say.
At a bank or broker-dealer, a compliance employee with a couple years of experience might make between $65,000 and $85,000 plus a bonus; five to 10 years of experience generally commands a base salary of up to $150,000 per year; and top professionals can expect $1 million or more.
In order to lure talent from a competing institution, a standard offer would include a salary that is 20 percent larger than what the candidate currently makes, Wachtel said.
Comparable compliance positions at hedge funds can command even larger salaries. Around six months ago, one officer jumped from a $425,000 salary at a big hedge fund in the Midwest, to an $800,000 one on the west coast, Wachtel said.
CHARTING A CAREER PATH
Compliance officers at big financial institutions, which can face scrutiny from several regulators, sometimes have to juggle a dozen or more exams to stay on top of their field. With no schools to provide specific training in anti-money laundering processes, employers often recruit from their rivals.
JPMorgan, for example, hired Pamela Johnson from Citigroup (C.N) last year to serve as managing director of financial crimes compliance. Johnson then brought over several of her deputies. Citigroup in turn hired William Langford, who formerly held Johnson's job at JPMorgan.
"It's hand-to-hand combat to get and keep qualified people," said Ellen Zimiles, who runs the investigations and compliance practice at the consulting firm Navigant. She said clients have hired groups of her consultants as they attempt to staff up.
Regulators say they are concerned that smaller banks may not keep qualified professionals because of poaching from big banks.
"They will take a good officer ... and leave weaker institutions with perhaps a weaker staff," Lisa Arquette, an FDIC official, said on a panel at the Association of Certified Anti-Money Laundering Specialists conference in Las Vegas last month.
(Additional reporting by Brett Wolf in St. Louis; Editing by Karey Van Hall, Tiffany Wu and Grant McCool)