The Financial Crime and Compliance sectors within financial services have seen in the past decades considerable growth. After getting a major facelift following the 2008 financial crisis, the expanding divisions have been under massive scrutiny from regulatory bodies across the world, adding increasing pressure on individuals who are meant to safeguard financial institutions. Moreover, these financial crime compliance teams have been forced to widen their range of duties as a result of the ever-changing regulatory landscape post-2008.

Then, 2020 arrived. The world saw itself change drastically in a matter of days, forcing financial services firms to reshift priorities and adapt - quickly - to a new reality. Financial Crime and Compliance functions were once again under the spotlight, as Boards and executives were focusing on increasing effectiveness and efficiency within their practice, especially in a remote working world.

What used to be a box ticking exercise for financial services firms has now developed into a business critical function. With regulatory fines on the rise and the growing popularity of digital-first financial businesses, Financial Crime and Compliance functions are more than ever becoming an interesting, challenging and lucrative sector to join. The below provides an overview of financial compliance as of today as well as expected challenges and trends in the field.

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Increasing Pressure from Regulatory Bodies

Recent regulatory failures from businesses in the UK and in Europe, such as the Commerzbank debacle, have shown the world how failing to have strong and qualified compliance and financial crime teams can lead to massive financial losses. Whilst cutting corners in the short term can seem appealing as it represents immediate cost savings, the long-term consequences of not hiring qualified compliance and financial crime professionals could prove fatal for a business.

Since 2013, more than £4.3bn ave been fined to financial services firms. Last year alone, more than £567.7m in fines were given in the United Kingdom.

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The FCA Fines Since 2013

Many renowned financial services firms have been subject to hefty fines from the British financial watchdog in relation to compliance and/or financial crime failures.

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The Rise of Fintech and Crypto

The past decade has seen an increasing number of fintechs penetrating markets globally, offering alternative solutions to customers when it comes to their financial needs and necessities. The growing popularity of these financial technology firms has also raised the bar in terms of end-user expectations: these days, consumers around the world are expecting cross-country money transfers to arrive safely in their bank account within minutes, or to get access to the best insurance policies with one click of a button.

The ease of money manipulation within the fintech world has made it much easier for fraudsters to get in the way - making it crucial for these businesses to put in place frameworks and processes that put consumer safety first. As a result, we have observed an increase in the demand of financial crime compliance professionals within the fintech market, as they are the ones overseeing the implementation of such controls.

​The crypto sector has also been under the spotlight in recent years, even more so since the COVID-19 pandemic. Growing interest in the digital assets space from consumers has forced regulators like the FCA to pay close attention to these firm's activities. In an effort to comply with local regulations, crypto firms have been putting more and more emphasis on buildling strong financial crime and compliance teams who would help them sail through the ever-changing regulatory landscape.

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Upcoming Trends and Challenges

According to several reports, the Compliance and Financial Crime sector is expected to experience a few shifts in the upcoming year from a hiring standpoint.

The latest survey from Thomson Reuters, which is composed of data pulled from over 700 compliance professionals in the United Kingdom, mentions how 47% of surveyed financial services firms expect the cost of compliance staff to increase in order to meet the sector's changes and challenges. They have also found that businesses are increasingly looking for three specific skills for their Compliance hires: subject matter expertise, communication skills and the capability to anticipate future regulatory trends.

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The Challenge: Keeping on Top of Regulatory Changes

Reports from both KPMG and Thomson Reuters have identified a key ongoing challenge within the financial crime compliance space: the ability to keep on top of regulatory changes and to implement them in an effective and timely manner. As mentioned in KPMG's latest report on transforming compliance within financial services, it is becoming increasingly difficult for financial crime compliance professionals to adapt to the expanding scope and detail of regulations. The volume, pace and complexity of new regulations have encouraged firms to reconsider the structure of their compliance teams and hire additional resources to cover all the expertises required.

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Key Takeaways

The ever-evolving regulatory landscape, combined with the increasing popularity of tech-focused firms and digital assets businesses, means that the Compliance and Financial Crime sector will be experiencing some changes in the years to come.

​Companies within financial services will need to figure out if the best course of action will be to upskill their current financial crime compliance staff in order to meet the new demands of the sector, or to expand their function by hiring new team members. If you are thinking of the latter, financial crime and compliance recruitment specialists such as Rutherford can help you identify the best regulatory experts in the market. Get in touch with our compliance recruitment Consultants today or see our latest resources such as our 2021/2022 Compliance Market Report.