Accessibility Links

Is compliance the biggest growth area in US finance?

Posted by: Laurence Simons 29/06/15

As increasing numbers of US organisations realise the value of compliance and invest heavily into it, we consider what is boosting the growth of the discipline. Its place in the financial sector is deeply rooted, with growing demand to fill banking compliance jobs, but is its value most easily seen in the prolific cases it is designed to prevent?

JPMorgan is one such example, having paid a total of $36 billion in settlements and fines since the global financial crisis in 2008. A selection of these fines are: selling securities from “toxic” mortgages, ($13 billion); failing to report dubious activity by Ponzi schemer Bernard Madoff ($1.7 billion); and, most recently, conspiring to fix foreign-exchange rates ($1.9 billion). Since 2008, JPMorgan has hired 8,000 compliance people and employees in 2014 underwent a total of 800,000 hours of compliance training in the bank’s mortgage business alone.

Over in Germany, when police raided the offices of Siemens at dawn in 2006, the US government jumped on board with accusations that the engineering firm, based in Munich, was in violation of the Foreign Corrupt Practices Act as it had dealt in bribery. The charge states that the organisation had issued bribes to win contracts for transit systems in Venezuela, power plants in Israel and refineries in Mexico. In reaction to this, Siemens hired a vast amount of lawyers from Debevoise & Plimpton, who then hired consultants and accountants from Deloitte. Siemens paid the two firms $850 million, pleaded guilty and paid an $800 million settlement, and then paid another $800 million in Germany.

So, although it is difficult to quantify compliance officers’ value in terms of fraudulent activity that never actually happened, it is easy to see in these two cases just how crucial their presence would have been to these industry giants. But what does that mean for the discipline itself? Well, it adds up to pretty impressive job security. And as the financial sector grows, demand to fill financial compliance jobs has never been so high.