Deutsche Bank unveils Q1 compliance hiring spree
The beginning of 2017 was a tough time for Deutsche Bank. The German financial services giant was hit with a £163 million penalty from the Financial Conduct Authority (FCA) for serious anti-money laundering (AML) controls failings.
According to the FCA, the fine was the largest the organisation had ever handed down to a business for AML issues, even when operating under its previous moniker as the Financial Services Authority.
The FCA’s punishment pales in comparison to a settlement that Deutsche Bank reached with the US Department of Justice (DoJ) in December last year. The organisation agreed a $7.2 billion (£5.5 billion) fine with stateside regulators regarding mortgage-backed securities, after haggling the DoJ down from $14 billion.
However, Deutsche Bank appears to be sending a message to stakeholders that it’s taking its failings seriously. The institution’s latest quarterly report revealed significant spending on compliance recruitment in the first three-month period of 2017.
Deutsche prioritises compliance hiring
Deutsche Bank has hired a net total of 370 people across its compliance and AML functions this year, despite overall staffing experiencing a decline. In fact, the bank reduced headcounts by 1,600 during the first quarter, while 200 external staff were internalised.
Over the three-month period, the organisation reported pre-tax profits of €878 million (£742 million) – up 52 per cent year on year. Profit rises occurred even with revenues declining €7.3 billion throughout the quarter.
Chief executive officer John Cryan said he was “pleased” with the company’s start to 2017 and claimed “firm foundations” had been laid to give a boost to future performance.
“Client engagement is strong, asset flows are returning across the bank and activity is picking up. Our cost-cutting efforts are starting to pay off, while we have reduced complexity significantly,” he explained.
Big changes for financial crime at Deutsche
Deutsche Bank’s compliance hiring spree is just part of the organisation’s revitalisation of its approach to AML.
In January, before the FCA’s ruling was announced, the bank’s head of financial crime and AML stepped down after just six months in the job.
Bloomberg reported that Peter Hazelwood resigned after Deutsche Bank cut back on staffing plans for his financial crime unit and his management style supposedly clashed with top executives at the company.
Mr Hazelwood intended to increase financial crime hires by 600 in 2017, but only 400 new people were approved. Deutsche Bank has implemented a recruitment freeze, although the compliance department has been specifically excluded.
Compliance executive Philippe Vollotas has since replaced Mr Hazelwood as the company’s new head of global financial crime prevention.
Looking to the future
Despite scaling down its ambitious financial crime staffing intentions, compliance still appears to be at the top of the agenda for Deutsche Bank this year.
In 2016, chief regulatory officer and member of the management board for the bank Sylvie Matherat emphasised the importance of strengthening the company’s compliance following Mr Hazelwood’s appointment.
“Robust and effective controls are essential to our business practice. Compliance and AFC are key functions to ensure that we manage our business activities to high standards at all times,” she stated.
Only time will tell how effective the company’s recruitment drive will be. But with other organisations facing similar regulatory pressure and fines, compliance professionals can expect demand for their skills to remain high in 2017.
Our 2017 Market Report combines our review of the prevailing conditions in the compliance recruitment market with the results of our latest employer survey.
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