The three biggest challenges facing AML compliance teams in 2024

compliance challenges

Amid increasing pressure from the regulators and ever-evolving legislation, modern financial institutions and regulated firms have bigger obligations than ever to ensure compliance and combat financial crime.

We embarked on a comprehensive research journey towards the end of 2023 to uncover the intricacies of AML compliance, taking a deep-dive into the ever-changing landscape and the future direction of the profession. With insights from more than 130 compliance professionals, this article sheds some light on the most pressing challenges that compliance teams are set to face in 2024.

With the ever-changing landscape of regulations, it is crucial for these professionals to stay ahead of the curve. They must not only navigate through new compliance requirements but also adapt to the advancements in technology that shape the industry. Additionally, attracting top talent is vital for ensuring a strong and capable team to combat financial crime effectively.

Staying on top of the latest trends in financial crime and money laundering techniques is also essential to anticipate and prevent potential threats. In this fast-paced environment, compliance professionals must possess the agility to think on their feet and swiftly adjust their strategies whenever necessary.

Resource capacity and capability

Reflecting our findings into the priorities for the year ahead, two in five (40%) of respondents believe that resource capacity and capability will be their biggest challenge for 2024. With compliance training and company growth high on the priority list this year, professionals are clearly predicting challenges in the up-skilling and growing of their functions. 

Last year, almost a third (31%) of respondents voiced the same concerns around resourcing being their biggest challenge. Unfortunately, the concern has only become more significant for firms this year. 

Without proper planning and investment in talent, compliance functions run the risk of becoming overwhelmed, understaffed, or even overlooked. This can have detrimental effects on the overall compliance processes, as existing team members may be burdened with excessive workloads, leading to burnout, decreased productivity, and compromised compliance processes.

Often in firms without dedicated compliance teams, it may be that fee earners or business administrators take care of conducting compliance tasks. This is not only taking precious time away from their ‘day jobs’ but leaving firms open to regulatory non-compliance, fines, and reputational damage without skilled professionals conducting onboarding checks.

AML compliance report

Therefore, it is imperative for organisations to proactively address these concerns and ensure that their compliance functions are well-equipped to meet the evolving demands of the industry. By investing in capacity planning and skill development, firms can not only safeguard against potential risks but also enhance their overall compliance effectiveness in the years to come.

Managing regulatory and political change

Mirroring our findings from 2023 once again, managing regulatory and political change remains a key hurdle for 2024. Cited by 39% of compliance teams as a major challenge, regulations typically arise in response to societal shifts, like the surge in interest for cryptocurrencies and NFTs, or major events such as the Russian invasion of Ukraine. They’re also often updated to keep pace with technological advancements, such as the rise of challenger banks and Buy Now Pay Later solutions.

Keeping abreast of regulatory changes becomes even more complex for companies with a global presence. Navigating cross-border and multi-jurisdictional AML rules can be quite a hurdle for compliance teams. Managing such varying AML regulations across different jurisdictions only adds another layer of complexity for professionals, making compliance an increasingly demanding task for regulated firms.

Inefficiencies in onboarding and AML processes

Charging up the challenges list is inefficiencies in onboarding and AML processes. Once again, mirroring the priorities discussed earlier, firms and compliance teams alike are prioritising the improvement of their AML processes this year. As inefficiencies run rampant for 35% of businesses, it seems many have reached breaking point and are actively looking to redefine and streamline AML processes in 2024. 

Reassuringly, personal liability, and ethics and integrity feature at the very bottom of compliance’s challenges for this year, cited by 8% and 9%, respectively. With a solid foundation of integrity in compliance management processes, respondents are confident in the strategies in place to address compliance risks – both from a corporate and individual perspective. It is only through ethical and integrity-driven compliance that teams become more effective and uphold the highest ethical standards in the face of evolving threats.

What’s more, worries about personal liability are minimal, and professionals have little concern around being held responsible for AML compliance failings. This signifies that most professionals have confidence and trust in their firm’s processes to ensure compliance with AML and financial crime requirements. 

In today’s ever-evolving digital era, staying informed about the latest trends in financial crime and money laundering techniques is absolutely crucial. By keeping a finger on the pulse of these developments, compliance professionals can proactively anticipate and prevent potential threats. This rapidly changing landscape demands agility and quick thinking from professionals in the field, as they must be able to adapt their strategies on the fly.

With the lives of businesses at stake, it is imperative that AML professionals remain vigilant and stay one step ahead of the fraudsters who are constantly seeking to exploit vulnerabilities. By staying updated and being prepared to tackle the latest methods employed by these criminals, compliance professionals can effectively safeguard their organisations and the financial wellbeing of their clients.

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