Bates Research - 02-15-17

The War on Talent: Competing for the Compliance Professional

by Geoff Winkler, Director - Fraud & Forensic Investigations

I had the opportunity to represent Bates Group last week at SIFMA’s 2017 Anti-Money Laundering and Financial Crimes conference in New York. While we discussed a number of interesting topics, there seemed to be one recurring theme: the “war on talent” for compliance professionals. 

A number of rules, regulations and laws have been enacted over the last few years requiring financial institutions to create new programs to meet these expanding obligations. In many cases this means hiring additional compliance personnel to their existing departments. In fact, the Bureau of Labor Statistics projects compliance jobs to grow by 3.3 percent through 2024, which is reflected in the ultra-low unemployment rate of 1.7 percent for compliance professionals. 

At the same time, regulators have begun to pay closer attention to the actions of compliance professionals when financial institutions have been found not to be compliant, and have even held some compliance professionals personally liable for the actions of their institutions. (See our three-part discussion on personal liability for compliance professionals here, here and here.) This new focus on personal liability has caused a number of compliance professionals to reevaluate their chosen career path and/or the institution they currently work for to ensure they are not taking on unacceptable risk, given the potential rewards in the job. According to DLA Piper’s 2016 Compliance & Risk Report (“DLA Piper Report”), 81 percent of all respondents were at least somewhat concerned about their personal liability, with 32 percent stating they are very concerned about personal liability. 

How Concerned are you About your Personal Liability?

Source: DLA Piper’s 2016 Compliance & Risk Report: CCOs Under Scrutiny

This concern about personal liability is having an impact on employment decisions: both when an applicant accepts a new job and when considering whether to stay in an existing position. The DLA Piper Report also reported 65 percent of respondents stating that increased scrutiny on compliance professionals will make them consider any compliance role more carefully.  Interestingly, 11 percent of all respondents also stated that this increased scrutiny will also make it very difficult for companies to find good candidates.

Given this landscape, financial institutions have expressed genuine concern about how best to attract and retain talented compliance professionals in order to meet their current obligations, while also trying to develop new programs set to go into effect in the coming months and years. This has led a number of firms to begin outsourcing some or all of their compliance duties. According to Reuter’s Cost of Compliance 2016, 25 percent of firms outsource some or all of their compliance responsibilities, due primarily to the “need for additional assurance on compliance processes and, of potentially greater concern, a lack of in-house compliance skills.”

Key Drivers for Outsourcing

Source: Reuters Cost of Compliance 2016

It is estimated that, given the increasing regulatory requirements firms are facing and the competition to recruit talented employees, the number of financial institutions that use outsourcing to meet their compliance functions (whether full-time or on a consulting basis) will only continue to grow.  Due to the great demand for compliance professionals in this competitive environment, firms may also have to face a reduced supply of professionals willing to serve in compliance positions as a result of increased regulatory actions against individuals.  Based on the foregoing, the “war on talent” may leave firms in a tight spot, making it difficult for them to effectively meet their regulatory obligations. 

Bates Group will continue to monitor each of these issues and will bring you updates as any significant changes occur. If you are concerned that your financial institution may need assistance in any of these areas, or if you have questions about other AML issues, please visit Bates Compliance Solutions online.


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