The Unvirtuous Cycle of Staffing Challenges for Financial Crime Compliance Teams 

Employee retention and staffing issues are becoming business as usual in financial crime compliance, according to a new report, Technology Transformation in Financial Crime Compliance, from WorkFusion and Celent. The research found that staff shortages and employee retention are perennial issues that create an unvirtuous cycle for financial crime compliance teams, leading to delays in compliance processes and limiting the ability of compliance departments to support the business with 74% unhappy with their current staffing level and 22% understaffed. Further compounding the challenge, it takes four months or longer to fill compliance analyst roles, 47% said it takes this long to hire for entry-level roles and 63% said it’s even more of a challenge for experienced roles.   

Compliance departments at banks and non-bank financial institutions (NBFIs) are challenged to keep up with the high volumes of alerts generated by their screening and detection systems. Analyst teams dedicated to investigating and decisioning alerts number in the hundreds or even thousands at large banks. Meanwhile, compliance units at smaller institutions are challenged to maintain adequate coverage with the limited resources available to them. 

Adding to the pressure, employee retention and other staffing issues are business as usual in financial crime compliance. Organizations are addressing these staffing challenges through a variety of methods including additional training (reskilling and upskilling), outsourcing, and technology.  

Senior Leaders Are Left Filling the Capacity Gap

According to the report, 70% of banks and NBFIs face capacity challenges in their compliance operations—meaning that many departments that are “staffed adequately” face at least occasional capacity shortfalls. 

To fill capacity gaps, 38% of firms call on more senior personnel to pitch in. Smaller organizations are more likely to call on their compliance officers to help out—44% of organizations with assets under US$50 billion rely on senior personnel to close gaps. This clearly impacts the time these senior personnel can spend on higher-value activities. 

Highlighting the ongoing nature of capacity shortfalls in compliance, 26% of organizations that are “staffed adequately” to meet their SLAs and 43% of those that are “staffed adequately” but face productivity issues need to call on senior personnel to fill gaps. This points to the endemic personnel challenges facing compliance departments. 

Employee Retention Issues Are Felt Throughout the Organization 

Employee retention is a widespread challenge in compliance operations. Even firms that are not experiencing shortages often have to expend considerable effort to maintain staffing levels. In fact, the time spent by HR on keeping staffed up is the top issue stemming from employee retention, cited by 65% of firms. 

Employee shortages and retention issues put increased workloads on the remaining staff, said 53% of respondents. And, about the same proportion of firms said that these staffing challenges led to longer cycle times for alert investigation, directly impacting compliance operations.  

For L1 teams, heavy workloads and repetitive and routinized processes can often lead to employee burnout. Retention issues lead to an endless loop where staff attrition places an increased burden on remaining staff; requires extra time and money to attract new hires; and causes delays in compliance processes—which in turn slow down the ability to support the business. 

Most organizations are using or considering training, automation, and outsourcing to counter the impact of staffing challenges. 

AI Is Assisting and Not Replacing AML Compliance Jobs 

Artificial intelligence (AI) technologies are becoming an essential capability for financial crime compliance technology. The majority, 86% of organizations, will increase their spending on AI and machine learning over the next two years with 45% increasing AI spending significantly. None of the firms said AI spending would decrease.  

A staggering 93% of firms said they will not replace people with AI, but rather they will use automation to increase efficiency and productivity, freeing up capacity to support risk and the business. 

AI and intelligent automation are emerging as effective technology levers for achieving increased efficiencies and boosting productivity—making it easier for organizations to ensure their analyst teams can keep up with ever-increasing workloads. 

“Leveraging AI-enabled automation technology to enhance efficiency and productivity can help alleviate capacity shortfalls in financial crime operations,” said Neil Katkov, PhD, Director – Risk at Celent. “And as technology drives improvements in productivity, compliance departments can better support strategies to manage risk and add value.” 

Drivers for Adopting Digital Workers  

Digital workers are a form of intelligent automation, powered by AI and machine learning-enabled software robotics. In the compliance screening context, digital workers can handle sophisticated workflows including adverse media monitoring and beneficial owner analysis, as well as more routine tasks such as identity verification. 

In terms of AI Digital Worker adoption, the report found that regulatory action is the top driver and would motivate 75% of organizations to adopt digital workers or similar advanced technology to improve compliance operations. Following regulation, staffing challenges were cited by 65% of respondents as a compelling reason for automation technology. 

System changes could lead 57% of respondents to adopt Digital Workers. For example, legacy screening systems typically have barebones alert decisioning features; adoption of a new screening system with case management would be an opportunity to apply virtual workers to automate workflows. And, M&A was cited by 35% of respondents as a potential driver for automation technology to handle increased post-merger workloads. 

Click here to download the full report.  

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