Future goals, challenges and opportunities in the compliance profession

Who doesn’t want to know the future? Through time there are many factors affecting the labor market and different professions. The financial compliance domain is one of the recently emerging ones. But it is increasingly growing and developing, being filled with AML analyst, KYC professional, legal functions, sanctions compliance and more. It has expanded across borders and we know it is here to stay.

In every decade there is a certain profession rising to the top – back in the 60s it was engineers, in the 70s were the accountants, 80s was the time of marketing people, in the 90s might be the wiz kids and the financial markets, followed by IT specialists in the millennia. Could it be that the next decade belongs to financial crime professionals? This is what James Treacy shared in Episode 15.

If financial crime prevention is the profession of the future, let us then review some of the goals that the industry has to set, opportunities, as well as obstacles which may arise.

Goal of the compliance profession

As Matthew Leaney greatly put it in Episode 10,

the goal of the financial crime prevention industry has to be to push out criminals, so that they would start saying "it's not worth it anymore, my risk and reward ratio has completely shifted against me".

Because for the illicit actors that's what it is - a calculation – in which currently the risk-reward ration makes sense. But, to fight successfully financial crime, all we have to do is change that ratio and make the financial systems unattractive for criminals.

A point mentioned by Martin Markiewicz in Episode 10 was that compliance professionals should keep raising the bar for criminals who want to use the different systems to launder funds. This happens through regulation, through policies, and usage of technologies which in combination increases the risk-reward ration and makes financial crime more difficult to take place.

Challenges

Some obstacles that the profession may experience arise from the global pandemic. COVID-19 slowed down projects and possibly some legislative efforts. Although the FinCEN leaks may have shifted the attention back to regulations and additional efforts on combating money laundering.

In Episode 3 Teresa Anaya said in relation to cryptocurrency and fintech startups that the pandemic may limit some of the revenue streams, and a lot of these companies may not be able to go back to the market and get funding. This may result in consolidation in the field and failure of the weaker players.

In Episode 6 Jeffrey Robinson mentioned that the money laundering situation can be improved only after the governments understand that they have to go to the Gatekeepers and punish them for wrongdoing. Otherwise, governments will continue putting pressure on banks which may suffer from compliance fatigue, and probably increase their efforts resulting in over-compliance. And overall, this will not help the fight against dirty money.

“Because of the financial pressures on banking institutions, we will start to see a further consolidation of roles”.

This prediction came from Ian Messenger in Episode 7. The previous separation of AML departments, fraud department, sanctions screening department could be slowly disappearing and those roles would start to be combined and consolidated into a leaner compliance department. Therefore, the spotlight in the compliance scene will fall on professionals who have a brought and diverse experience. With the streamlining of compliance related roles there might be some job losses and as a result maybe some hiring freezes could take place. Thus, to be the best candidate for a role in compliance, one should really have to have a strong resume. This, for better or worse, includes having certifications, courses, and key skills which can be demonstrated. All these will be of vital importance going forward.

Opportunities ahead

In episode 2 Maureen Mutua envisioned that the profession will need more independence from management so that it is more efficient. This may become more and more reality, considering the pressure from the recent FinCEN leaks.

Additionally, to improve and get better, compliance experts outline that public-private partnership are of great importance.

“There needs to be more onus on law enforcement intelligence, the customs and private industry to work together and provide information”.

Stephen Scott expressed this view in Episode 8. This way law enforcement could leverage real-time information to solve a crime, and on other hand compliance professionals will also receive intelligence which can be used in their investigation. James Treacy (Episode 15) outlined that not only the public-private partnerships need to be enhanced but data sharing too, has to be improved. One of the legal frameworks which could assist is the GDPR (or the general data protection regulation).

Further, compliance is moving beyond typical financial institutions into corporates. As Mathew Leaney (episode 10) mentioned, a lot of US tech firms are now also offering payments – Apple, Google and Facebook are only some of them. Telecoms and travel are also moving towards the space. Thus, non-financial pressures could be put on criminals to reduce the availability of the rewards of criminal activity – for example limiting access to communication, certain technologies or travel. To drive them to a point in which they would say "there's no point doing this horrible thing anymore because I can't do anything with the money".

If you had a crystal ball, what would you predict? What does the future hold for compliance?