Financial institutions keep spending heavily on compliance technology, yet the most damaging control failures continue to trace back to something no software can fix.

According to Vinay Vyas, who has more than 20 years’ experience on some of the world’s most complex financial crime cases, the root cause is rarely technology or process. It is culture, as detailed in a recent Argus Pro post.

The author points to one major case they led, in which a bank was fined $2.6bn. On paper, the institution appeared well protected. It had written policies, transaction monitoring and dedicated compliance teams. What it lacked was an environment where those controls were taken seriously.

Employees doubted that raising concerns would lead to action, and they had little faith that they would be protected if they spoke up. In effect, the culture had settled the outcome long before regulators became involved.

A more recent example reinforces the point. In October 2024, TD Bank agreed to pay around $3bn to US regulators, the largest penalty ever imposed under the Bank Secrecy Act. The Department of Justice cited ‘long-term, pervasive, and systemic deficiencies’ in the bank’s compliance programme, noting that more than 92% of transactions went unmonitored between 2018 and 2024.

While the technical shortcomings were serious, the finer detail reveals a deeper problem. Staff reportedly joked internally that the lender was ‘America’s most convenient bank’ for money laundering. Managers ignored warning signs, and one branch manager dismissed suspicious activity with laughter in a company email. Meanwhile, leadership enforced a ‘flat-cost’ budget on compliance even as the business expanded quickly, leaving the teams tasked with stopping illicit flows under growing strain.

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