JCW Group | Blog

High Demand for AML, KYC skills in Luxembourg

Daniel Evans

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Demand for regulatory compliance professionals in Luxembourg is at an all-time high, creating a skills shortage that could be great news for compliance professionals living in London.
In fact, if you have skills in anti-money laundering (AML), know your customer (KYC), then Luxembourg’s financial institutions could be a rich vein of opportunity for you

Demand for AML/KYC Skills Is Growing in Luxembourg

We have seen hiring for AML/KYC skills in Luxembourg ramp up recently. There are four major contributory factors to this burst of enthusiasm to hire talented employees in these areas.

1.     Brexit Has Altered the Regulatory Employment Landscape

The first is Brexit. Pre-Brexit, firms in Luxembourg were able to easily piggyback off their capabilities in their London middle office. Therefore, most – in some cases, all – of the regulatory compliance activities were undertaken in London. There wasn’t the need for the same strict governance structure in Luxembourg.

Now, post-Brexit, regulators want to see this compliance work done locally. They want to see Luxembourg’s financial companies build out their teams where business is conducted. The trouble is that the talent pool doesn’t exist in Luxembourg, because of how financial institutions have operated historically.

2.     The EBA Has an Ambitious Works Program

Second, internal structures at the European Banking Authority (EBA) have been evolved rapidly. New directors have been promoted in line with their revised priorities for 2021. It is promoting five strategic areas of work as it adjusts to playing by the single rule book encompassing risk tools, data, digital finance and AML:

  1. Supporting the deployment of the risk reduction package
  2. Implementing effective resolution tools
  3. Enhancing the stress testing framework
  4. Integrating quantitative Pillar 3 disclosure data with supervisory reporting
  5. Strengthening operational resilience

Luxembourg’s financial institutions will be expected to fall into line with these priorities, as the EBA targets the establishment of ‘sound and effective governance and good conduct in financial institutions’.

3.     Technology Is Increasing the Need for Certain Skills

Third, while technology is being used to enhance regulatory compliance and can undertake low-level identification and analysis of risk (hence, less need for people in this function), it is throwing up more issues that must be assessed by human intervention (for example, in the proliferation of fraud). Therefore, there is a ballooning need for skilled and talented regulatory and compliance staff to assess and action across specific focus areas.

4.     The Reactionary Nature of Recruitment

Banks are businesses. They rarely (if ever) take the lead on regulatory issues, especially when it comes to building out expensive teams and hiring the talent to staff them. They are reactionary by their very nature, and so is recruitment.

European regulators have not pushed for financial institutions to ensure they manage their regulatory compliance as strictly as UK regulators did with UK institutions five or so years ago. This may be because so much of the regulatory work was conducted in the UK, or because of the centralized nature of the EBA (it takes a lot longer to push change through when there are so many member states fighting their own corners).

That has changed, and now that compliance is under the microscope, Luxembourg’s financial institutions are rushing to hire. They need to de-risk from the potential for hefty fines to be levied against them. Everyone is scrambling to put measures in place – hence the sudden surge in hiring.

The EBA Has Signalled Its Intentions

The EBA has appointed a new director of data analytics, reporting and transparency, and this has made it clear that the EBA means business. Consequently, there is a renewed focus on beefing up existing teams. Everyone is hiring across AML and KYC, and in the data space, too.

Luxembourg – The Land of Opportunity for AML/KYC Talent

As you can see, the reasons for hiring specific regulatory and compliance talent in Luxembourg are compelling for businesses. But that talent does not exist in Luxembourg. Consequently, the laws of supply and demand have conspired to push salaries and benefits packages to extreme levels.

Luxembourg’s financial institutions need to improve and enlarge their regulatory teams across AML/KYC. Consultancies, too, are getting in on the act, putting a lot of time and investment into building software that will do onboarding for their clients. The trouble is that this throws up more problems, and again increases the need for talented employees.

In short, Luxembourg could be the ideal destination for your skills and experience. Interesting and resume-enhancing work, good salaries, attractive benefits, and relocation packages, as well as many other perks, are on offer.

Is the next stage in your career a move from London to Luxembourg? For a confidential discussion, get in touch with me today.

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