Financial Crime World

The Evolution of Compliance Functions at Banks

Current State and Future Directions

Compliance functions at banks have undergone significant changes in recent years. The size of compliance headcount is driven by a bank’s size, geographic footprint, and level of regulatory scrutiny.

Key Points

  • Size and Regulatory Scrutiny: The number of compliance professionals on staff is directly related to the bank’s size and level of regulatory oversight.
  • Global Compliance Capabilities: Banks with international operations require dedicated local compliance capabilities, increasing the need for compliance headcount.
  • Regulatory Effectiveness: Regulatory scrutiny has a lasting impact on compliance functions, extending beyond initial capacity needs during remediation or monitorships.
  • Anti-Money Laundering and Terrorist Financing: The fight against money laundering and terrorist financing drives the largest second-line compliance headcount.

Opportunities in Digitization

The increasing use of technology presents opportunities for compliance functions to achieve efficiency gains through end-to-end process transformation.

Pointers for the Future

To stay ahead, banks should focus on several key areas:

1. Pressure Testing Compliance Programs

Regularly assess and improve compliance effectiveness and efficiency to identify areas for improvement.

2. Introducing Agile into Compliance

Adopt agile ways of working to gain speed, efficiency, and maintain independence within the compliance function.

Identify key topics shaping the compliance landscape over the next three years:

  • Efficiency
  • Data availability
  • Regulatory changes
  • Qualified employee availability
  • Comprehensive risk assessment

By adapting to changing regulatory requirements and technological advancements, banks can ensure the effectiveness and efficiency of their compliance functions.