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Understaffed And Overworked: Why Compliance Operations Is Broken

Compliance officers across the country are dealing with high stress, long hours, mental health issues, and broken operations. How can the system improve the workload for AML employees?
Will Lawrence
Co-founder and CEO at Greenlite

There’s been a surge in AML-related consent orders in the last few years. They all have a common theme—that compliance teams are suffering from inadequate staffing.

Here are a few examples that'll make you wince:

  • “HSBC Bank USA severely understaffed its AML compliance function and failed to implement an anti-money laundering program capable of adequately monitoring suspicious transactions and activities… [HSBC] failed to monitor over $670 billion in wire transfers… [HSBC became the] preferred financial institution for drug cartels and money launderers.” —The Department of Justice, in a 2012 consent order action that was just terminated in 2022.
  • “Capital One admitted to willfully failing to implement and maintain an effective Anti-Money Laundering (AML) program to guard against money laundering…failed to file thousands of suspicious activity reports (SARs)… [these compliance failures] caused millions of dollars in suspicious transactions to go unreported in a timely and accurate manner, including proceeds connected to organized crime, tax evasion, fraud, and other financial crimes.” — FinCEN statement announcing at $390 million action against Capital One

It’s clear that banks and financial institutions across the board are struggling to scale compliance, and are dealing with the repercussions. But how did this happen?

The Perfect Storm

A few factors converged to create an especially painful environment for AML teams:

  1. Pandemic-Driven Growth: The pandemic led to an unexpected boom in assets under management (AUM) as consumers found themselves with increased savings. At the same time there was a significant shift towards digital transactions and online account openings. This rapid growth in both volume and complexity of financial activities outpaced the ability of most institutions to scale their compliance operations.
  2. Talent Shortage: The "Great Resignation" hit AML departments hard, with experienced professionals leaving for new opportunities or early retirement. Recruiting new talent has become increasingly difficult, with a shrinking pool of qualified candidates and intense competition for their services.
  3. Regulatory Pressure: High-profile events such as the collapse of FTX, the Silicon Valley Bank crisis, and the (more recent) Evolve Bank & Trust consent order have brought increased scrutiny to the financial sector. Regulators are tightening their oversight, leading to more complex and demanding compliance requirements.

Unbalanced and Overworked: The Human Impact

The result of this perfect storm is a workforce that's stretched to its limits. AML analysts and compliance officers find themselves drowning in a sea of alerts, reports, and regulatory demands. A 2023 survey by the ACAMS found some scary results:

  • 68% of AML professionals reported experiencing high levels of stress in their daily work.
  • 42% of respondents have thought about leaving their current role due to burnout.
  • A study published in the Journal of Financial Compliance noted a 30% increase in reported mental health issues among financial crime prevention professionals between 2020 and 2023.

The quotes from survey respondents are alarming too:

“My work load is too much. I have a complete lack of work/life balance.”

“I face regular bullying behavior from commercial because they see compliance as getting inthe way.”

“I am made to feel responsible for things over which I ultimately have no control.”

These statistics and quotes paint a troubling picture of an industry struggling to cope with its responsibilities.

Broken Without Solutions

Perhaps the most frustrating part of this situation is that compliance teams are acutely aware of the issues in their processes. In conversations with AML teams across the industry, a common refrain emerges: we know what needs to be fixed, but we don't have the time or resources to fix them.

One senior AML analyst at a mid-sized bank summed it up succinctly:

"We're so busy keeping our heads above water that we can't even think about swimming to shore."

So what do we do?

The old models of scaling compliance are breaking at the seams. Increased digital activity, talent shortages and regulatory pressures are creating cracks in an organization’s AML programs that are being punished by regulators.

For AML teams reading this: we see and hear you, and change is on the horizon. The first step to solving any problem is acknowledging it even exists. In 2024, the banking industry can no longer ignore the pressures and issues their compliance teams deal with daily.

That’s why in this essay series, we’re going to explore new ways of approaching these challenges and study how forward-thinking institutions are reimagining their AML operations.

There’s a lot to be optimistic about. We’re seeing organizations, from regional credit unions to massive banks, adopt innovative solutions to scale their compliance output. Many of these involve combining staffing with better technology and others rely on AI-based solutions to create scale.

If you’re keen to understand how technology is being used to give AML teams with newfound power, send me an email at [email protected]. I’d also love to hear from AML leaders and investigators

For now, it’s important to recognize the herculean efforts of AML professionals who continue to protect our financial system despite the lack of bandwidth and support.

For AML teams reading this: we see and hear you, and change is on the horizon. The first step to solving any problem is acknowledging it even exists. In 2024, the banking industry can no longer ignore the pressures and issues their compliance teams deal with daily.

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