The Evolution of Banking Compliance Officers

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For many years compliance was relegated to the backwaters of the banking industry. In the old days banking compliance was seen as an unnecessary cost, and regulators as impediments. One old regulator joke went, ''I'm from Washington, and I'm here to help you.'' However, as banks began to understand the suffering of other banks that made major mistakes, they realized the importance of compliance. Cases like the Enron and WorldCom debacles made both the government and bank shareholders think deeply about the importance of compliance.

The Need for Banking Compliance Officers

With new banking regulations trickling in and complexity increasing, the need for professional banking compliance officers has only grown greater.

In 2002, the Sarbanes-Oxley Act, which was aimed at improving the accountability of publicly held companies, provided banks a platform through which they could check into the risk profile of a company. Hence, banks need professionals who can understand the law thoroughly.

After the September 11 attacks in 2001, Anti-Money-Laundering (AML) guidelines came into the limelight. In 2002, new rules to prevent money laundering set major changes for securities trading, credit card firms such as Visa International, and money-service businesses such as Western Union.

Banking compliance officers in almost every country were trained to monitor, investigate, and report suspicious transactions to the regulatory agencies or central banks.

Another useful weapon against money laundering and other financial crimes has been the use of Suspicious Activity Reports (SARs). When banks suspect illegal financial activities, they have to file an SAR with the Financial Crimes Enforcement Network (FinCEN), an agency of the United States Department of the Treasury.

At present, national banks are required to report suspected criminal offenses or transactions over $5,000 that they suspect may involve money laundering or violations of the Bank Secrecy Act.

Burgeoning Demand for Banking Compliance Officers

In the last few years banks have faced significant challenges in training their employees for compliance work. Also, the need for experienced banking compliance officers who can manage a team of banking compliance officers has been burgeoning.

As a result of all these changes, banking compliance officers are today enjoying something they never thought they’d see in their careers: they are more sought after than other specialists in the industry. The job market for banking compliance officers is thriving — they are difficult for banks to find and can consequently garner very high salaries.

Another reason that the demand for banking compliance officers is growing is the regulatory threshold of $200 million: when a bank’s assets total more than this amount, the bank needs to follow certain stringent regulations. As such, any such bank will inevitably need a full-time compliance officer.


Today, new banking regulations are announced more often than ever. Most recently the Federal Reserve Board proposed changes in credit card rules: banks will be prohibited from increasing the rate on a pre-existing credit card balance, and must allow consumers to pay off any balance over a reasonable period of time.

With new regulations coming up frequently, banking compliance officers must always stay up to date. Today, compliance professionals shoulder a lot more responsibility. They need to approach compliance from a risk-management perspective to ensure that high-risk areas are identified and addressed early, without disrupting the business of the bank.
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Popular tags:

 Sarbanes-Oxley Act  credit cards  banking  AML  costs  Bank Secrecy Act  Visa International  public companies  suffering  Washington

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