Exploring banking compliance in the digital era, the case of Moroccan banks

Abstract

Over the past ten years, banks around the world have paid more than $230 billion in financial penalties for compliance risks. As a result, banking institutions involved in money laundering and other compliance risks have invested large sums of money to remedy detected anomalies through action plans, programs and the recruitment of compliance experts to restore their reputation. Indeed, the implementation of a compliance mechanism is necessary to help ensure the security and reputation of banking institutions. In addition, changes in customer behaviour during the health crisis have created a number of challenges for the various compliance departments within the bank: (a) the increase in the number of AML, CFT and international sanctions alerts (b) the high market volatility due to the health crisis, which generated a large number of alerts related to market abuse, and (c) the exponential evolution of cyber-attacks, where the slightest loophole in the protection of personal data is exploited by fraudsters. The compliance risks generated by technological developments and rapidly changing customer behaviour has put the spotlight on the current banking compliance framework and the role of digitalisation. In order to explore the relationship between digitalisation and compliance, we conducted a qualitative study with the aim of proposing a conceptual model that describes this relationship. In this paper we have been able to demonstrate the underlying relationship that can arise between digitalisation and banking compliance. However, this study could have been complemented by research measuring the relationship between these two variables by adopting a quantitative approach.

JEL Classification : G18 Government Policy and Regulation

Paper type: Empirical research