The year 2024 is not only a year of elections and the year of the dragon, it continues for compliance to be a year of disruptive digital transformation with top challenges ahead in a multifaceted manner, Ralph Ebert writes in his essay for finews.first.
finews.first is a forum for authors to comment on economic and financial topics.
In reverse order, I have identified the following Top 10 challenges for compliance which – in the words of Morgan Freeman – «will lead to growth».
10. Data Protection
With the increasing focus on data protection and privacy, complying with such regulations as well as ensuring the security of customer data is a constant concern for banks. Open banking solutions with API technology to share client data across the industry will increase the need for a solid data protection framework.
9. Financial Crime
Financial crime prevention remains a hot topic in the industry with an impressive $800 billion of laundered money every year. AI tools and technology with machine learning and biometric verification capabilities have significantly contributed to increasing the effectiveness of AML programs, but as the criminals dispose access to the same tools & technology, compliance has been disabled to take the lead in this battle until now.
8. Fraud
Fraud remains in the Top 10 list, equivalent to over $2,500 stolen every minute in 2022. Criminals have become more sophisticated since COVID-19 by exploiting online platforms to commit fraud, with investment or romance/scams on social media. In 2024, AI-based frauds have started to appear and will need tool detection enhancements for banks.
7. Climate Change & Sustainable Finance
As the World Meteorological Organisation predicts that 2024 will be «warmer than 2023»; Environmental, Social, and Governance (ESG) factors will continue to be in the focus for banks including new ESG/sustainable disclosure and reporting requirements as well as ethical considerations for business practice.
6. Crypto & Blockchain
Despite the crypto winter’ digital currencies and cryptocurrencies are back on the radar of financial services in 2024. Whereas over 130 countries are reported to be investigating the use or adoption of central bank digital currencies (CBDCs) and Bitcoin has recovered from the 2021 crash, overall, the crypto space is far from being regulated neither by regulators nor by self-regulations of the market participants. Finally, Blockchain as distributed ledger technology is becoming increasingly commonplace in financial services. Researchers predict that spending will increase by 4 times: up from $4.5 billion in 2023 to $19 billion in 2024.
5. and 4. Search for Talents and Conduct Risk
Both topics are related to the human factor in compliance taking into consideration that young talents of Generation Z possess the hybrid skill set of critical thinking and analytic data skills which is essential for compliance. Still, they seem to be more attracted by large tech companies and the arrival of fintech as a new predator in the talent hiring market. At the same time, banks re-focus on the establishment of a real compliance culture and a new trusted employer-employee relationship to combat integrity and conduct risks more effectively.
We are now entering the Top 3 of challenges in 2024:
3. Cybercrime
The sophistication and frequency of cyber threats continue to increase with an estimated total cost for the global economy of $8 trillion in 2023 and we expect a further increase mainly by AI-enabled or sophisticated next-level phishing attacks. The national and international. regulatory framework is still weak, and particularly the new EU Digital Operational Resilience Act (DORA) as of 2025 is expected to further fortify the banks’ IT security standards.
2. Geopolitical Pressure
As tensions increase between the US and China, the ongoing conflict between Russia and Ukraine and the escalating situation in the Middle East, banks seek more and more geopolitical advice and have tightened the applicable risk-appetite strategies. In particular, the sanction risk has gained complexity and is on every compliance agenda with a focus on the right data, technology, process, and risk tolerance.
1. Intelligence (AI) & Generative AI
The AI genie is well and truly out of the bottle: In 2024, the rise of AI and generative AI poses significant risks for compliance professionals. These technologies can generate increasingly sophisticated fraudulent documents, making it challenging to detect and prevent financial crimes. Moreover, the reliance on AI in compliance processes raises concerns about algorithmic bias and the need for robust oversight to ensure ethical and legal adherence.
Ralph Ebert is a German lawyer with a career marked by his presence in senior compliance roles within global and private banking institutions such as BNP Paribas, Credit Suisse, UBP, Credit Agricole Indosuez, and Banque International à Luxembourg (BIL). With nearly two decades of experience in compliance, his specialization extends beyond Anti-Money Laundering (AML) into the forefront of digital transformation within compliance, regtech, AI solutions, and blockchain innovations. His YouTube channel «Compliance Coach» serves as an interactive hub, offering a unique perspective on compliance matters.
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