The compliance paradox: Small teams, big demands
Introduction
In a complex and fast-evolving regulatory environment, the role of compliance professionals has never been more critical, or more challenging. Across the legal, property, and accountancy sectors, compliance teams are grappling with rising regulations, static resources, and growing pressures. To better understand these challenges, we surveyed 150 senior compliance leaders in the United Kingdom.
This research reveals that compliance leaders are committed to safeguarding their firms, often without the support they deserve. It highlights the resilience and dedication of compliance leaders who, despite overwhelming workloads and limited resources, remain determined to protect their organisations from risk.
Webinar: From the frontline - How compliance teams are doing more with less
Our report highlights what we know all too well - that demands of compliance teams are at an all-time high despite flatlining resources. Join our webinar on 26th June to hear first-hand how compliance leaders are tackling this paradox and championing the work of their small-but-mighty teams.
Key findings
Detailed look at the findings
Compliance teams have limited resources - and unfortunately that isn’t going to change anytime soon
Most compliance functions consist of a small number of dedicated professionals protecting their businesses. The reality is stark: the average compliance team has just five people, placing enormous pressure on this small group of experts.
With increasing regulatory activity and more sophisticated fraudsters, will this situation improve?
Unfortunately not. Our research shows that 74% of respondents expect their compliance workforce to either remain static (41%) or shrink (33%) in the next 12 months.
When you're a compliance officer in a business like this, you feel very much that you are on your own.”
Compliance officer, Estate agent
Resource constraints extend beyond staffing.
Budgets are frequently tight, with 31% of teams expecting cuts next year. This isn't surprising, given that 53% of senior management don't take anti-money laundering (AML) compliance seriously. Without recognition of the team's crucial work, additional headcount is unlikely to materialise.
Compliance teams need to get used to doing more with less.
The role of compliance isn’t fully understood within firms, but there are some really positive signs
The crucial role of compliance in protecting businesses remains poorly understood, though there are encouraging signs of improvement.
This lack of understanding creates two key problems. First, building an effective compliance culture is difficult when people don't grasp its importance. Ultimately, this weakens compliance programme effectiveness. Second, it’s harder to secure additional resources (people, technology, or financial) when the function's role and purpose aren't clear.
So, how big is the problem?
Our research found that 51% of respondents say compliance is not respected within their firm, and only 15% believe their work is perceived as critical and valued. This stark disconnect between perception and the vital nature of compliance work is concerning.
Compliance can be a massive headache for our solicitors.”
Risk and compliance manager, Law firm
This lack of understanding may stem from several factors highlighted by the compliance leaders we surveyed. They noted areas that they would like to improve include greater appreciation that "anti-money laundering checks require appropriate time to ensure accuracy and effectiveness" (26%) and that "fostering a culture of compliance is more effective at protecting the business than simply completing checks" (21%).
However, there are encouraging signs. The role of compliance as a function is generally well understood (65%) within these regulated businesses, though this varies by industry, dropping to 54% among estate agency businesses. This level of understanding reflects compliance leaders' success in communicating their vital role.
Compliance leaders are also receiving recognition for their important work, with 77% receiving public praise for their team's efforts at least once a month. This recognition is especially prevalent in smaller organisations, where 82% of those working in companies with 150 or fewer employees receive regular public praise monthly.
When it comes to retaining top-performing compliance staff, businesses should take note . The vast majority (78%) of compliance leaders would look to change roles if they were approached by a recruiter with a role that came with better support, resources and recognition.
How can you enhance your team's understanding of compliance? One effective approach is through regular, engaging training that brings topics to life through real examples. Incorporating actual case studies can transform what might be considered a challenging subject into something more relatable and engaging.
Read our blog which offers helpful tips on how compliance officers can build a culture of compliance.
Compliance leaders are committed to protecting their firms - sometimes at a personal cost
Despite some misunderstandings about compliance leaders' roles, they are effective at protecting the firms they work for and their clients.
When it comes to safeguarding society from money laundering, 64% of leaders believe their current measures are effective. This confidence varies by industry, with 72% of accountancy professionals and 64% of estate agents believing their anti-money laundering (AML) measures are working effectively.
Money laundering is not a victimless crime; therefore, we want to ensure we do everything in our power to prevent our customers from becoming the victims of fraud or money laundering.”
Head of AML and MLRO, Estate agent
In terms of protecting their firms from fines, compliance leaders show less confidence, in fact fewer than half (48%) believe their current practices effectively comply with AML regulations. This varies by sector, with 52% of estate agents and 50% of law firms confident that their policies, controls, and procedures are working effectively.
Despite frequent changes to money laundering legislation, evolving regulatory guidance, and sometimes unclear standards of "good" practice, compliance leaders are doing an outstanding job of protecting their firms.
This is evidenced by several good practices being implemented. The vast majority (88%) tailor their client due diligence (CDD) based on identified risks, a practice that regulated firms should follow when implementing a risk-based approach. Additionally, 74% take a firmwide approach to CDD. Whilst taking a firmwide approach may not suit all situations, it can help protect the firm against passporting risk, where the client may first engage you on a low-risk, unregulated matter and later requests services in regulated, potentially high risk, sector without completing the necessary due diligence.
Read more in this article on why failing to tailor your CDD to the risks identified leaves you exposed.
However, there is a personal toll to implementing these effective processes amid limited resources, increased regulatory pressure and ever more sophisticated criminals. Many compliance leaders find their work overwhelming (35%) or completely unmanageable (12%).
The demands of AML compliance are forcing teams to work overtime just to stay compliant. Nearly half (42%) must work overtime at least once a week to handle AML-related issues.
The consequence? AML compliance is negatively impacting compliance leaders' mental health on a weekly basis (49%).
Conclusion
This research reveals a complex landscape where compliance leaders are performing a vital role in protecting their firms, often with limited resources. Despite these challenges, they remain committed to their mission of safeguarding their organisations from financial crime and regulatory breaches. Even with a changing landscape, compliance leaders have done a good job of explaining their role to aid understanding and they frequently receive public praise for the work their teams are doing. However, the findings also highlight an urgent need for firms to better support their compliance functions with adequate resources to ensure sustainable and effective compliance programs.
Want to know how other teams are coping?
This report confirms the tough reality of the compliance paradox. But understanding is just the start. Join our webinar on 26th June to hear directly how leading compliance teams are not just coping but conquering these challenges, and learn how to champion the success of your own small-but-mighty team.