COMPLIANCE OFFICERS are the killjoys of finance. To bankers and traders keen to let rip, they are the po-faced types who, while generating no revenue themselves, frown at any transaction that might breach this rule or contravene that regulation.
At the end of 2018, some 30,000 of the 204,000 employees of Citi, an American bank, 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. At the end of 2008 it was just over 4% of employees. JPMorgan Chase could just about fill it with the 43,000 it claims to employ in “fortress controls” .
Compliance is gaining not just investment, but clout. In the past it was often buried in the legal or risk department, and compliance chiefs reported to chief risk officers or general counsels. Now they are more likely to have a direct line to the top: for instance, HSBC’s Mr Bell reports directly to the chief executive and attends meetings of the board’s risk committee.
Banks such as BNP and HSBC, which are now several years into compliance-boosting efforts, have entered a “stabilisation” phase, says a consultant. Having started by throwing people at the problem, they are now seeking to increase efficiency and lower costs. Some, including UBS, have even suggested it may be time to pare back after the boom. Spending on compliance at HSBC peaked in 2017, says Mr Bell.
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Most international banks are facilitators in Money Laundering.
It has resulted in an exponential rise in cost ... ultimately the client would end up bearing it.
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