One thing disruptor banks didn’t expect to be challenging: Compliance

Innovative challengers are building compliance into their DNA and outcompeting established players.

Opinion by: Michael Carbonara, CEO of Ibanera

Each year, an estimated $800 billion to $2 trillion is laundered globally, accounting for 2%–5% of global gross domestic product. The money moves through the world’s biggest banks, whose penalties for regulatory failures often make headline news. TD Bank accrued $3 billion in charges over alleged Anti-Money Laundering (AML) failures this past quarter. Citigroup was fined $136 million for “insufficient progress toward compliance.” Even disruptor Starling Bank, which celebrated its 10th anniversary this year, was fined $39 million last month for “shockingly lax” AML screening.

At first glance, compliance may seem straightforward — implementing Know Your Customer (KYC), verifying legitimacy and monitoring each transaction to prevent illicit activity. These basic principles should be easy to implement, especially for some of the world’s largest banks. That’s not the case. 

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