Bridging the Skills Deficit Through Managed Services: A Strategic Approach to Careers
In the dynamic world of finance, the need for adaptability and a well-trained workforce in compliance is paramount. This is particularly true as financial institutions (FIs) increasingly turn to permanent outsourcing of compliance functions to managed services providers (such as Business Process Outsourcing or BPO).
This trend is closely related to the rising use of AI, automation, and crypto-AML technologies in the industry. The key relationships between these factors are manifold.
Addressing internal resource constraints and scaling compliance: Outsourcing compliance functions helps FIs fill staffing gaps with trained AML professionals and quickly scale operations to meet new threats or regulatory changes. The use of AI and automation enhances this by enabling faster, more accurate compliance monitoring and risk management at lower operational costs.
Access to specialized expertise and advanced technology: Managed service providers often have access to sophisticated AI-driven tools for transaction monitoring, customer due diligence, screening alerts, and suspicious activity reporting. This aligns with the trend of incorporating Agentic AI that continuously tracks regulatory changes, automates reporting, and improves risk detection and mitigation in real time.
Enhancing efficiency, agility, and cost reduction: Outsourcing combined with AI technologies allows FIs to reduce expenses by leveraging talent in lower-cost jurisdictions while maintaining compliance quality. AI automation significantly cuts manual workloads, speeds up decision-making, and helps reduce compliance violations and related legal risks.
However, the adoption of AI in AML/CFT processes also presents challenges. The European Banking Authority notes that while AI improves efficiency, financial institutions struggle to understand AI fully and recruit skilled staff to manage these tools effectively. Furthermore, criminals also increasingly use AI to automate money laundering schemes, generate fake documents, and evade detection, which increases the complexity of compliance tasks outsourced and automated in the industry.
The integration of AI and automation into compliance processes supports faster detection of high-risk or novel transaction types, including those involving cryptocurrencies, thus strengthening AML controls in new financial domains. However, FIs need to be aware of the systems such as Chainalysis, CypherTrace, Elliptic, TRM Labs, etc., when doing business in the crypto space or with exchanges, as regulators are getting tougher with crypto providers.
The scarcity of skilled resources available in the market for compliance, coupled with rising knowledge requirements for AI, automation, and crypto-AML, is adding to the pressure. A business school graduate may pursue a career as a compliance officer despite a lack of specific courses on fighting financial crime.
Workloads in compliance are expected to grow at least 30% over the next two years. Financial institutions engage with managed services providers to quickly provide resources for urgent compliance requirements such as lookbacks for KYC or AML, often due to regulatory mandates.
In conclusion, the shift to permanent outsourcing of compliance is being accelerated and transformed by the rising use of AI, automation, and crypto-AML tools. These technologies empower outsourced providers to deliver more scalable, technologically advanced, and cost-efficient compliance solutions—while also posing new challenges in oversight, risk management, and regulatory understanding that institutions must carefully manage. The answer seems to lie in a balance between strategic vision and tactical agility.
A study conducted by AML RightSource with HFS suggests that about 30% of financial institutions will shift to permanent outsourcing arrangements for managed services over the next two years. AML RightSource has trained resources and a train-the-trainer program for new projects in the crypto space, further supporting this trend.
[1] AML RightSource, "AML RightSource and HFS Release Study on the Impact of AI and Automation in AML/CFT," Press Release, 2021. [2] HFS Research, "The Future of AML: How AI and Automation are Transforming Compliance," Report, 2020. [3] KPMG, "AI in AML: A New Frontier," Report, 2019. [4] European Banking Authority, "Opinion on Artificial Intelligence and Machine Learning in Anti-Money Laundering and Countering the Financing of Terrorism," Opinion, 2020.
- The trend of outsourcing compliance functions in finance increases as financial institutions leverage technology, with many using AI, automation, and crypto-AML technologies to improve efficiency, agility, and cost reduction, while also encountering new challenges in oversight, risk management, and regulatory understanding.
- Managed service providers often have access to advanced technology, including specialized AI-driven tools for transaction monitoring, customer due diligence, and suspicious activity reporting, which aligns with the increasing use of agentic AI that continuously tracks regulatory changes and improves risk detection and mitigation in real time.
