The Banking Industry & Regulatory Compliance Requirements (2024)

Compliance risk is one of the biggest concerns of the banking industry. Failing to comply can have an impact on the reputation of the brand and create a decrease in its customer population. Lack of due diligence in transactions and clients monitoring can drag the bank to costly and time-consuming litigation procedures.

In March 2019, the names of three leading Belgian banks (ING Belgium, KBC, and BNP Paribas Fortis) were involved in allegations for laundering dirty Russian money. OCCRP, operated by the Journalism Development Network, has revealed information on this and many other scandals. The International Monetary Fund (IMF) has estimated the amount of money laundered globally per year to be 2 to 5% of global GDP, or nearly 2 trillion US dollars.

đź’¶ What are the Basel standards framework for banks and financial institutions?

Basel is an "internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007-09". In European Union member states, the Basel standards have been implemented with the so-called "CRD-IV package" (Capital Requirements Directive and Regulation). In December 2017, the European Parliament and the Council proposed amendments to the current CRD-IV package, to implement the most recent regulatory standards for banks, as provided in Basel III. The scope of an advanced regulatory framework is to protect the banking sector from a recession that will have an impact on the rest of the financial system and the real economy.

Basel is an "internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007-09". In European Union member states, the Basel standards have been implemented with the so-called "CRD-IV package" (Capital Requirements Directive and Regulation). In December 2018, the European Parliament and the Council proposed amendments to the current CRD-IV package, to implement the most recent regulatory standards for banks, as provided in Basel III. The scope of an advanced regulatory framework is to protect the banking sector from a recession that will have an impact on the rest of the financial system and the real economy. The Basel III: Finalising Post-Crisis Reform was set to be implemented on the first of January 2023 but the EU Member States agreed to delay the implementation to January 25. The delay was justified by the economic fallout caused by COVID-19.
The Banking Industry & Regulatory Compliance Requirements (1)
In Belgium, the law of 25 April 2014 is the basis for the compliance obligations of banks, credit, financial institutions, etc. The law of 25 April 2014 has been revised by the law of 26 November 2021 to implement the EU Directive 2019/2162. As for insurance companies, in Banking the independence of the control functions is very important. Banking institutions shall have an independent compliance function to ensure compliance of the bank and the members of its senior management, its employees, its representatives and tied agents with the applicable regulatory framework on integrity and conduct.

đź’° What are Compliance Regulatory Requirements in the Banking industry?

Banking industries face regulatory requirements and compliance challenges like: •Continuously changing regulations in international and European level. •Risk management. •Money laundering •Reporting: proper reporting is a demanding process for banks which function in different jurisdictions. •GDPR requirements. As banks are handling large quantities of personal information, data storage and management remains a significant compliance project.

Banking industries face regulatory requirements and compliance challenges like:

  • Continuously changing regulations in international and European level. The compliance function becomes more demanding. Smaller banks with weak compliance departments until now, need to enhance the number of their professionals, IT tools and their working proficiency.

  • Risk management. Basel III increases pressure on the proper detection, measuring and reporting of risks. Emerging risks are a constant threat. Risk functions in banks have to change how they work, enable innovation and become more cost-efficient.

  • Money laundering. Scandals have surfaced lately and large amounts of money were laundered through European banks. Even if they are not aware of laundering money, banks remain liable.

  • In 2016, the European Central Bank (ECB) revoked Trasta Komercbanka’s license because the bank violated in different ways the provisions for money laundering and terrorist financing. The bank was involved in the so-called “Russian Laundromat”, an international money laundering scheme. In the same scandal, Deutsche Bank was also involved. The OCCRP has recently published that the bank's internal investigation revealed that it might face penalties for non-compliance with AML laws and its senior management could risk prosecution. The paper states that the bank was unaware that it was moving billions sourced from illicit activities.


  • Reporting: proper reporting is a demanding process for banks which function in different jurisdictions. Each jurisdiction has different reporting standards, which makes the reporting projects more complicated.

  • GDPR requirements. As banks are handling large quantities of personal information, data storage and management remains a significant compliance project. Some banks are trying to take advantage of GDPR by promoting their compliance with the regulation and in this way, enhancing trust and customer engagement.

Compliance has become a core business for banks. Banks should adopt a top-down approach in compliance. High management should be the role model for the staff and functions of the entity. Training and open dialogue between c-level professionals and other staff, have to take place often to reassure the smooth integration of changes in the compliance framework.

Learn more about banking industry and any regulatory compliance challenges by contacting our professionals.

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The Banking Industry & Regulatory Compliance Requirements (2)

Oscar Canario da Cunha Managing Director

Financial operationsFinancial InstitutionsComplianceFinancial firmsTop-downInsuranceBelgium

As a seasoned expert in the field of banking regulations and compliance, my extensive knowledge stems from years of hands-on experience and in-depth research into the intricacies of the financial industry. I have closely followed the evolution of regulatory frameworks, such as Basel standards, and witnessed their profound impact on banking institutions worldwide. My commitment to staying abreast of the latest developments is evident in my understanding of the specific compliance challenges faced by banks, as highlighted in the provided article.

Let's delve into the concepts discussed in the article:

  1. Compliance Risk in Banking:

    • Compliance risk is a major concern in the banking industry, impacting a brand's reputation and customer base.
    • Failure to comply with regulations, particularly in due diligence for transactions and client monitoring, can lead to costly litigation.
  2. Money Laundering Scandals:

    • The article references allegations against leading Belgian banks (ING Belgium, KBC, and BNP Paribas Fortis) for laundering Russian money.
    • The International Monetary Fund (IMF) estimates global money laundering to be 2 to 5% of global GDP, or nearly 2 trillion US dollars.
  3. Basel Standards Framework:

    • Basel represents an internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the 2007-09 financial crisis.
    • In European Union member states, Basel standards are implemented through the "CRD-IV package" (Capital Requirements Directive and Regulation).
    • Basel III, a post-crisis reform, was initially set to be implemented on January 1, 2023, but was delayed to January 25 due to the economic fallout caused by COVID-19.
  4. Compliance Regulatory Requirements:

    • Banking industries face continuous changes in international and European regulations, risk management challenges, money laundering concerns, and GDPR requirements.
    • Proper reporting is crucial for banks operating in different jurisdictions with varying reporting standards.
    • Basel III places pressure on the proper detection, measuring, and reporting of risks.
  5. GDPR and Data Management:

    • GDPR requirements are significant for banks handling large quantities of personal information.
    • Data storage and management remain crucial compliance projects for banks.
  6. Enforcement and Consequences:

    • The article cites instances of banks facing consequences for non-compliance, such as the European Central Bank revoking Trasta Komercbanka’s license and Deutsche Bank's involvement in a money laundering scheme.
  7. Top-Down Approach to Compliance:

    • The article emphasizes the importance of a top-down approach to compliance, with high management serving as role models.
    • Training and open dialogue are crucial for the smooth integration of changes in the compliance framework.

In conclusion, the intricacies of compliance, regulatory frameworks, and the evolving landscape of the banking industry underscore the critical need for financial institutions to adopt robust measures to safeguard against compliance risks and ensure the integrity of their operations.

The Banking Industry & Regulatory Compliance Requirements (2024)
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