Purpose This paper aims at analysing how regulatory changes, introduced post-Basel III, have shaped the role of Compliance Function (CF) in “financial institutions”, where “banks” are the cynosure of the research. Design/methodology/approach This study combines a systematic literature review with content analysis to classify the selected sample into clusters and respective sub-clusters. Findings This research identifies six clusters underscoring the pivotal role of CF to address the challenges that all “financial institutions” – banks, financial investment firms, insurance companies and other types of financial intermediaries, including those structured as FinTech companies – face to adopt provisions of the financial regulatory framework and to observe good operational practices. Research limitations/implications The analysis mainly focuses on European institutions, making the results less applicable to other contexts with different financial systems and regulations. As a result, global compliance challenges, especially in emerging markets or less harmonised systems, may not be fully represented. Practical implications From the perspective of financial institutions and regulatory authorities, this paper confirms the centrality of the CF in a dynamic environment, enhancing the organisation’s strategic resources. The results contribute to implementing best practices for the CF, thereby achieving efficiency, resilience, profitability and stability across all financial institutions. Social implications The CF serves as a critical safeguard against banking crises by ensuring adherence to regulatory frameworks and fostering sound risk management practices. A robust compliance culture mitigates systemic and idiosyncratic risks, reducing the likelihood of misconduct and financial malfeasance that could lead to widespread economic consequences. Originality/value This paper has highlighted which aspects of CF are most investigated in the literature, outlining a clear path of its activities and clearly recognising the strategic role in the organisations.
Castro et al. (Thu,) studied this question.
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