In 2023, as compliance professionals navigate the ever-changing regulatory landscape and priorities in compliance changed, the need for a function that leads the charge in ensuring continued compliance while supporting growth, improving the customer experience, and continuing the ongoing fight against financial crime is increasingly critical.
2022 saw compliance teams facing persistent change and disruption, from economic uncertainty and the lasting effects of the pandemic to ongoing instability and strained relations between NATO and Russia.
As part of our ‘State of Compliance’ research project, we collected data from interviews with almost 50 compliance professionals across more than a dozen industries to find out the trends and priorities set to transform compliance in the year ahead.
With 2023 expected to bring heightened economic, regulatory and social uncertainty, compliance leaders must rethink how they provide critical services and strategic guidance.
In surveying a cross-section of the compliance landscape, we uncovered precisely where leaders plan to focus their efforts for success in 2023.
Compliance training tops priorities in compliance
Unsurprisingly, given the inevitable change that continually affects the profession, compliance training is the top priority for 42% of respondents. Remaining current on skills, knowledge and training is a defining part of success in compliance.
Additionally, training is an excellent way to future-proof the department. Especially, in such a changeable environment, ensuring as little a knowledge gap as possible among compliance team members is key in supporting both current and planned business activities.
Leaders to harness power of compliance data
Making use of data and analytics, coupled with comprehensive reporting is another key priority for compliance teams looking ahead to 2023, being cited by 36% of respondents.
Data and analysis is crucial in moving from knowing your customers to truly understanding them. Armed with as much insight as possible, compliance teams are able to generate valuable business and management reports, uncover which cases are utilising the most resources and gain a deep understanding of KYC and KYB success rates.
What’s more, data and analytics are not only reducing operational workloads in case management, but they can also be used in the prevention of financial crime. Compliance teams that are making use of advanced analytics can improve the KYC process, refine sanctions screening, and monitor ongoing client activity, helping to identify risks proactively.
Cybersecurity remains imperative
A third of respondents also cite cybersecurity as one of their top priorities for the coming year. Regulated businesses are required to gather sensitive customer information as part of the KYC and KYB process, including identity verification documents, source of wealth and funds, adverse media reports, sanction list screening and PEP checks.
In a data-driven financial environment, cybercrime has emerged as a major concern for regulators and institutions, with criminals manipulating computer systems and online financial services to commit money laundering, fraud and other crimes.
The European Institute of Management and Finance
Ensuring that the internal systems and processes involved in the acquisition of this data is secure and free from prying eyes is critical. Any sort of vulnerability can lead to data breaches that can paralyse entire businesses through fines, legal proceedings and reputational damage.
Not only is cyber and information security a key part of data collection in terms of AML and KYC processes, but ensuring robust business-wide cybersecurity protocols can help to prevent data breaches, social engineering attempts, malware and viruses from devastating cyberattacks. Seasoned cybercriminals will attempt to access sensitive data for crimes such as identity theft and fraud, but may also seek to perpetrate other forms of financial crime including theft and scams in order to steal money from your business, your customers or both.
identity theft and fraud, but may also seek to perpetrate other forms of financial crime including theft and scams in order to steal money from your business, your customers or both.
A company’s strategy must include anti-fraud, anti-money laundering, and cyber security initiatives as top priorities, with adequate budgets for employee training, tools, and constant monitoring for any vulnerabilities.
Conversely, ESG initiatives and introducing RegTech were bottom of the priority list for compliance leaders, being cited by just 18% and 20% of respondents respectively.
Considering how much emphasis has been placed on ESG initiatives and how important technology has become to compliance in recent months, it is logical that the lower ranking of these two business-critical factors on priority is due to the fact that they are already underway and being managed effectively within wider compliance strategies.
