In this article we talk to James Batters, a contract recruiter at the compliance recruitment consultancy of Morgan McKinley in the City of London.

Autumn is nearly upon us and compliance recruitment trends are adapting to it. Banks and other financial firms are relegating staff to the provinces and (because of Brexit and cost considerations) abroad as well. This article takes the form of a question-and-answer interview.

Q: We are now coming towards the end of September. What kind of job-flow have we been seeing over the summer?

A: In contract compliance recruitment we have seen a seen a post-summer spike. Everyone has been returning to work from their summer holidays and they are now concentrating once again on taking on new staff. The job flow has improved.

Having said that, we're still seeing some uncertainty in the market. The job flow is actually down year-on-year - it might be caused by Brexit, it might be caused by the new accounting standard, IR35.

There are more fixed-term contracts coming through, as opposed to day-rate contracts where the bank pays you through your own company. Because of the changes wrought by IR35, fixed-term contracts are now more likely to come in.

Q: What are the hot areas of recruitment in the City?

A: In KYC we have seen clients (i.e. private banks and asset managers) asking for people with ever-more specific expertise. You used to have general KYC experts floating about between all kinds of financial companies - now it has gone very 'niche.' Clients have started making specific sectoral requests - they want someone specifically from a hedge fund or specifically from an asset manager.

In financial crime in general it has been fairly stable.

AML/EDD analysts are in stable demand. They are the people who can look at jurisdictional risk - if you're a client that onboards people from the Far East, then you'll want people who can root out information from those jurisdictions. Employment is especially stable in small-to-medium private banks that specialise in high-risk jurisdiction. A lot of small private banks have a geographical niche.

Employment is also stable for EDD analysts, i.e. people who can look at corporate structures and pick out hidden beneficial owners. At small banks they still rely heavily on web searches as well as ready-made database firms like World-Check and Lexis Nexis.

Q: And the sectoral trends?

A: There has been a slowdown in asset management hires. It's almost business as usual after a plethora of heavy new regulations in previous years - especially MiFID II and the SM&CR (Senior Managers and Certification Regime).

A: Have firms finished adapting to MiFID II and the SM&CR?

Q: Well, a lot of them are most of the way there, let's put it like that. No major regulation has come out this year. When MiFID II was announced, everybody went crazy.

A: Is there any demand for compliance trainers?

Q: T&C (training and competence) comes up on my radar. Mind you, we haven't seen many compliance training specialist roles going this year. When we see it, for example in an asset manager with 200 staff in London that wants to take on five people, nobody will do T&C full time.

A: What kind of percentage of staff does compliance take up at the average private bank?

Q: We've seen that 10% is a healthy number for banks. That's more of a guess than a fact. It's our rule of thumb but of course it fluctuates.

A: I have read that financial firms embarked on an orgy of compliance recruitment after the crash of 2008 and went overboard in the following years, so now they are rationalising and their compliance headcount is going down. Is there any truth to that?

Q: That's a really interesting point. I don't know if banks are pushing their numbers down globally, but they are certainly doing it in the City. Compliance officers are draining out of London and we're certainly seeing a decrease. Some of this springs from the fact that they're regionalising KYC. It's cheaper for them to move these operations to Bournemouth or somewhere outside London and it's down to costcutting. They have probably reached their limit with compliance spending - they probably can't spend more on it and still make money!

Q: What about the world outside the UK?

A: We're seeing centres of excellence being set up in the Baltics by banks that are sponsoring them in their capacity as employers. Poland, Latvia and Lithuania are among the countries. They are doing it in conjunction with ACAMS, the Association of Certified Anti-Money-Laundering Specialists, and with nobody else. The growth, I heard from ACAMS CEO last year, is 500% year-on-year, which is crazy. In London it's 50% year-on-year but in the City, it's privately funded. Most candidates are self-funded, i.e. they pay for the course they go on. This suggests that various banks are planning to outsource a lot of AML work to the Baltic countries.

* James Batters can be reached on +44 207 092 0281 or at jbatters@morganmckinley.com