Financial Crime World

The Transformation of Compliance Functions in European Corporate and Investment Banks

===========================================================

Introduction

The Compliance function in European Corporate and Investment Banks is undergoing rapid changes due to evolving regulatory requirements, technological advancements, and the need for cost efficiency. This report explores the challenges faced by Compliance functions in adapting to these changes and provides recommendations for successful transformation.

Key Points from the Report

  • Fast-paced transformation: The Compliance function is transforming rapidly due to evolving regulatory requirements, technological advancements, and the need for cost efficiency.
  • Culture shift: Compliance needs to transform from a policy enforcer to a business partner, developing strong ties with Risk management.
  • Big Data impact: Big Data can provide further insight, improve cost/speed ratios, and enhance visualization capabilities in areas such as Anti-Money Laundering (AML) and Know Your Customer (KYC).
  • Screening tools: Traditional analytics and screening tools are not enough; Big Data provides a complementary approach for a second line of defense.

Key Takeaways

Compliance Function Transformation

  • Compliance functions must rapidly adapt to regulatory requirements and technological advancements.
  • Culture shift is necessary from policy enforcer to business partner.
  • Big Data can provide additional value in AML and KYC processes.
  • Traditional analytics are not enough; a complementary approach using Big Data is required.

Recommendations

Embracing Technology

  1. Leverage technology: Use Big Data, analytics, and visualization tools to enhance Compliance capabilities.
  2. Develop close ties with Risk management: Ensure effective collaboration between the Compliance function and Risk management.
  3. Foster culture change: Encourage a culture shift from policy enforcement to business partnership within the Compliance function.

By adopting these recommendations, banks can successfully navigate the challenges of transforming their Compliance functions and stay ahead in the rapidly evolving regulatory landscape.