Legal and compliance has had a golden decade since the 2008 financial crisis. While the majority of those working in finance have labored under cutbacks and stiff capital requirements, their headcount and clout has grown. The plethora of regulations, covering everything from capital and corporate governance to disclosure and diversity has led to financial institutions bulking up their workforce. “You have to build an industrial-scale operation just to digest all the regulatory changes,” says Colin Bell, HSBC’s chief compliance officer.
HSBC, which was fined $1.9bn in 2012 for banking Mexican drug money, has around 5,000 employees in anti-money-laundering (AML) compliance. Standard Chartered, which has coughed up $1.8bn for breaches of sanctions, has 3,500. Both banks spend $500m a year on AML alone - for Standard Chartered, the equivalent of a fifth of its pre-tax profit for 2018. At the end of 2018, some 30,000 (or 15%) of the 204,000 employees of Citigroup, worked in compliance, risk and other control functions – enough to fill more than two-thirds of the seats at Citi Field, the New York Mets’ baseball stadium. Compared to 2008, where just over four percent of employees worked in legal and compliance.
According to Forbes, 35% of compliance professionals believe that the largest driver of transformation in compliance is now improving responsiveness to business growth needs, as compared to mitigating future risk. Compliance professionals are adopting new processes and technological innovations, which has resulted in enhancing the skill sets of compliance professionals across financial services, as described by the National Society of Compliance Professionals. Even at the federal regulatory level, FINRA has embraced AI and machine learning technologies to keep a close eye on the market and provide essential support to investors, regulators, policymakers and other stakeholders.
In a complex regulatory landscape, professionals who ensure their employer plays by the riles of an ever-changing game are in high demand. A global study of risk and compliance officers at 800 financial firms in 2018 found that 43% expected their team to grow in the next 12 months.
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