With increasing regulatory demands and rising costs, more firms are turning to outsourcing for compliance functions. The trend, highlighted in a Thomson Reuters survey, shows that 34% of financial services firms outsourced some or all of their compliance functions in 2020, the highest rate ever recorded. Companies are leveraging outsourcing for tasks like compliance monitoring, ID checks, financial promotions approval, and regulatory updates.

Larry Gordon, Managing Director at Endurance Advisory Partners, warns of the “bus risk” problem—where losing a key in-house expert could cripple compliance efforts. While outsourcing can provide consistency and efficiency, Gordon shares a cautionary tale: when a bank struggled with offshore consultants missing critical red flags due to language and interpretive issues, ultimately forcing them to change course.

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