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A bevy of quality financial sector observers, ranging from The Economist to the Wall Street Journal to The Financial Times and more, are reporting that the current high demand for hiring compliance officers is not a transient fad, but a phenomenon with true staying power, one that has been growing significantly since the Global Financial Crisis of 2008-09.

“Staffing and investment in compliance officers are likely to remain well above pre-crisis levels,” noted The Economist in a 2019 article on the topic. “Banks caught up in dirty-money scandals are not only rushing to hire, but advertising the fact to soothe markets… Banks are also throwing money at staff training—and policing it.”

Finance and banking industry players are the chief entities to hire compliance professionals for Know Your Client (KYC), Anti-Money-Laundering (AML), Client Due Diligence (CDD), and Counter Financial Terrorism (CFT) efforts.

A report released in 2014 by recruitment company Barclay Simpson found that a full 87 per cent of company compliance departments they evaluated were looking to hire new compliance agents. In addition, the report found that the number of compliance officers in the UK’s division of HSBC Bank grew from less than 2,000 to approximately 7,000 in 2014.

So fast and sizeable was the hiring wave that, ultimately, 10 per cent of the HSBC Banks’s staff came to control, through regulatory compliance, what the remaining 90% did, The Wall Street Journal observed.

Recognised financial hub centres in Europe were largely responsible for the new hires, The Financial Times found. According to the paper, demand for compliance agents increased by 65 per cent in the city of London, six-fold in Luxembourg and five-fold in Frankfurt between 2015-17.

A global study of compliance officers at 800 financial firms conducted by Refinitiv in 2018 found that 43% of those surveyed expect compliance officer hires to increase in the next 12 months, with only 5% expecting a dip in hires.

Demand Compliance Officers

What Explains the Increase in Demand for Compliance Professionals in Europe?

Many factors have led to a great industry appetite to hire compliance officers in Europe. These are:

  1. The Global 2008-09 Financial Crisis

The meltdown of global financial industries, known as the Financial Crisis, in 2008-09 was caused by gross negligence, under-regulation and poor ethics among banks and other financial entities. From credits being offered to individuals who were underqualified to banks hiding their financial information from the authorities, these, among other malfeasances, led to a meltdown when the real estate bubble crashed in the United States.

The US agency Financial Crimes Enforcement Network (FinCEN) considered the scale of negligence among financial entities, judged as the sum of financial transfers linked to fraud or money-laundering between 1999 and 2017 to amount to USD 2 trillion. Policy leaders were pushed by the public to do everything in their power to more heavily regulate the financial industry to prevent such meltdowns from ever taking place again.

  1. New Regulations

Changes in domestic laws led to a dramatic hiring of compliance officers in EU countries. Financial companies and entities, in order to keep up with the passing of the new regulations, sought, and still seek, professionals responsible for tracking regulation changes and practicing risk management.

Although the American Foreign Corruption Policy Act was legislatively passed in 1977, it was only after 2010 that other first-world nations decided to follow; for example, the United Kingdom and its Bribery Act of 2010. This was followed by the 2017 French legislation, SAPIN II, which required all companies with an employee base of more than 500 to stick to a regulatory code of conduct, as well as anti-corruption measures.

On the level of the European Union, national legislatures were prompted to pass directives aimed at improving the efficacy of the financial sector in combating compliance risks and irregularities. For example, the 2016 General Data Protection Regulation (GDPR) forced EU companies to develop personal data protection policies, as did the 5th AML Directive of 2015 or the Mandatory Disclosure Rules of 2018.

  1. Rising Environmental Concerns

EU regulators must implement controls protecting the environment within companies. In the beginning, since 2009, EU companies could voluntarily be a part of the Eco-Management and Audit Scheme (EMAS); however, since 2018, EU companies have been subjected to the European Commission’s (EC) Action Plan on Environmental Compliance and Governance. Through the plan, the EC seeks to implement effective and obligatory environmental law enforcement on all EU companies.

Certain EU member states have drummed up their own environmental initiatives. In France, the 2015 French Energy Transition for Green Growth Law requires all companies to report the impact of their business on the environment.

  1. Penalties

The GDPR mandates fines of up to EUR 20 million and 4% of worldwide annual revenue on all companies who are non-compliant with securing personal data.

Fenergo, a fintech company, released a report in 2020 detailing that global banking penalties topped $36 billion since the financial crisis. In just 2019, twelve of the globe’s top 50 banks were fined with KYC, AML, and sanctions violations. The United States found two-thirds (63%) of European financial entities to be guilty of violating AML and sanctions regulations with countries such as Cuba, Iran, Sudan, North Korea, Myanmar, and Libya.

In early 2019, Google was slapped a EUR 50 million by a French watchdog for violating obligations to transparency and information security. Swiss investment bank UBS was fined $11.15 billion in 2008 for violating investor protection rules, the third largest banking fine ever collected in the world.

These exposé cases clearly mean that both policymakers and enforcement agencies are serious in prosecuting financial crimes. As a result, companies have developed an appetite for hiring compliance professionals with risk assessment skills that help them comply with the law through an effective compliance programme.

  1. Brexit

Several companies in the UK opted to move their operations to continental Europe following the referendum on Brexit. Because of this, companies in both the UK and EU are hiring more compliance agents who are well versed in international trade and regulations to streamline the Brexit process, from a strict angle of compliance and corporate governance.

tech compliance
  1. Technological Developments

New risks arise as the Internet evolves, global digitalisation matures, and access to new technologies becomes more widespread. Among the digital threads that are common in today’s world are hacking and phishing schemes, online fraud, and data and privacy breaches.

At the same time, encrypted online messaging, the digitalisation of banking services, and crypto-currencies revamped the old threats of financial terrorism, money-laundering, and other international crimes. As a result, banks quickly sought, and seek, to hire KYC and AML analysts, with some financial entities looking to especially hire in-house risk specialists onboard.

  1. Covid-19

The pandemic has made scores of people understand the importance of operational resilience, health and safety standards, and crisis management policies. While some domestic governments passed rules and regulations changes that were seen as effective, other nations experienced uncertain results for their own changes.

It’s not easy to estimate how far-reaching the consequences of the pandemic will be, but a 2020 Osborne & Clark survey found that 56% of UK compliance manager respondents said they expected the compliance risk to rise in the years coming, while 70% expected spending in compliance will grow in the next five years in order to check the perceived rise in compliance risks. Clearly, UK investment in financial crime prevention is set to grow.

  1. Sanctions on Russia and Belarus

Ongoing sanctions on Russia and Belarus over their 2022 invasion of the Ukraine continue to be passed by countries and global bodies, alike. This ultimately means more compliance officers need to be hired in order to effectively enforce sanctions rules on banks, private-sector companies, and other entities and individuals in the EU.

AGRC Training Is Key to Your Success

With the future of demand for compliance officers looking so bright, the AGRC invites you to receive the training you need in order to become a sought-after compliance officer. Take a look at our courses and training certification programmes and consider enrolling today.

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