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News & Press: FIBA News

Recruiting and Retaining Compliance Staff is Key Risk for Banks, Regulator Says

Wednesday, May 22, 2019   (0 Comments)
Posted by: Pedro Luis Lantigua
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Small lenders in particular face hurdles when it comes to attracting staff to manage anti-money-laundering compliance programs

U.S. banks are having a hard time recruiting and retaining compliance professionals, the Office of the Comptroller of the Currency said in a semiannual report on the risks facing lenders. PHOTO: ANDREW HARRER/BLOOMBERG NEWS

BY Kristin Broughton


Criminals laundering money through the financial system have long been one of the top risks facing the banking industry. Building a solid defense against such intrusions is becoming another, a U.S. financial regulator said Monday.

U.S. banks are having a hard time recruiting and retaining compliance professionals, particularly those who specialize in financial crimes, the Office of the Comptroller of the Currency said in a semiannual report on the risks facing lenders.

Recruiting hurdles are particularly high at small lenders and regional banks, the national banking regulator said.

Banks have expanded their compliance departments over the past two decades in response to laws enacted following the Sept. 11, attacks, which imposed new requirements on banks to spot financial crimes.

Too few universities have developed curricula that can produce professionals capable of stepping into high-demand compliance roles, said David Schwartz, president and chief executive of the Florida International Bankers Association, a trade association for domestic and international banks that focuses on financial crimes compliance, among other issues.

That creates a cost issue for banks that want to beef up controls. “Getting good compliance people is expensive,” Mr. Schwartz said.

The OCC’s report also cited cybersecurity and credit quality as risks faced by the banking industry.

The agency identified several areas of weakness at the banks it examines, including inadequate processes for identifying risky customers, conducting customer due diligence and filing reports on suspicious transactions.

Still, the agency said, lenders have made positive strides when it comes to strengthening controls in areas such as adopting anti-money- laundering controls for new products and services.

To improve the efficiency of their compliance programs, banks are looking at new ways to use artificial intelligence and other advanced technologies, the OCC said.

Regulators last year gave the industry the green light to experiment with new technology to spot financial crimes.

Small banks also have entered into collaborative agreements to pool anti-money-laundering compliance resources, following guidance last year from regulators, the OCC said.

Write to Kristin Broughton at Kristin.Broughton@wsj.com