Hiring compliance staff during regulatory investigations: risks and strategy

Regulatory investigations often become a serious stress test for a company’s corporate governance and compliance framework. During such periods, organizations frequently decide to urgently strengthen their compliance teams by hiring specialists in AML, internal control, and risk management. On the one hand, this step can demonstrate to regulators that the company is willing to address identified issues and reinforce its control systems. On the other hand, rushed hiring without a clear strategy may create additional legal and organizational risks. Regulators closely examine any changes in governance structures during investigations, including the appointment of new compliance officers and the redistribution of responsibilities. In this article, we examine the risks associated with hiring compliance staff during investigations and practical approaches to managing these situations.

Why companies strengthen compliance teams during investigations

When a company becomes the subject of a regulatory investigation, one of the first priorities is to assess the effectiveness of its existing compliance framework. Regulatory reviews often reveal gaps in risk controls, weaknesses in AML procedures, or poor coordination between internal departments. In such situations, management may decide to strengthen the compliance function by bringing in additional specialists.

Expanding the team can serve both as a practical necessity and as a signal to regulators that the company is ready to address identified issues. However, such a step should form part of a broader remediation and internal control strategy rather than being a reaction driven solely by regulatory pressure.

Companies typically strengthen compliance teams during investigations for several key reasons:

The need to conduct an internal investigation and analyze potential violations;
Preparation of responses to regulatory requests and collection of documentation;
Development and implementation of a remediation plan to address deficiencies;
Strengthening AML/CTF procedures and transaction monitoring systems;
Improving internal controls and governance processes.

In some cases, regulators directly recommend or require strengthening the compliance function as part of a corrective action plan. It is important that newly hired specialists not only formally occupy positions but also have real authority and resources to implement necessary changes.

What risks are involved in hiring compliance staff during an investigation

Although strengthening the compliance team during a regulatory investigation may seem logical, the process can involve several legal and managerial risks. Regulators closely review staffing changes during investigations and may treat them as part of the company’s overall response to identified issues.

If new hires are made without a clear strategy and transparent allocation of responsibilities, this may raise additional questions from regulators or complicate internal processes. Therefore, potential risks should be considered at the planning stage when adjusting the compliance function.

Reputational risks

A sudden expansion of the compliance team during an investigation may be interpreted as a signal that serious issues have been identified. In some cases, this can attract additional attention not only from regulators but also from banks, partners, or investors.

Such situations are especially sensitive when a company publicly announces major compliance changes. These steps should be accompanied by a clear communication strategy to avoid the perception that the company is admitting significant violations.

Conflicts of interest

When hiring compliance specialists during an investigation, potential conflicts of interest must be considered. For example, a candidate may have previously worked for an organization involved in reviewing the company or may have professional connections that could affect the objectivity of the internal investigation.

Regulators may pay particular attention to such circumstances, especially if the new employee gains access to confidential information or participates in preparing responses to supervisory authorities.

Unclear allocation of responsibilities

Another common risk is the improper distribution of responsibilities between the existing compliance team and newly hired staff. If roles and authority are not clearly defined, this may lead to duplication of functions, internal conflicts, or delays in decision-making.

During a regulatory investigation, such uncertainty can complicate communication with regulators and reduce the effectiveness of corrective actions. Therefore, any changes to the compliance structure should be accompanied by updates to governance documentation and clear definitions of responsibility.

The role of compliance officers during regulatory audits

During a regulatory investigation, the role of compliance officers expands significantly. These specialists become key participants in interactions with regulators and in the internal analysis of identified risks. Their responsibility is not only to maintain existing compliance procedures but also to identify systemic issues that may have led to the investigation.

During this period, the compliance function often becomes a central element of the company’s risk management framework. Both newly hired and existing compliance staff may participate in reviewing company operations, assessing internal processes, and preparing corrective measures.

The responsibilities of compliance officers during an investigation may include:

Participation in internal investigations and analysis of potential violations;
Review of the effectiveness of existing AML/CTF procedures;
Assessment of transaction risks and monitoring systems;
Preparation of responses to regulatory requests and collection of documentation;
Development and implementation of remediation measures;
Strengthening internal controls and updating compliance policies.

Compliance officers also often play an important coordinating role between the legal department, company management, and external advisers. Such coordination helps ensure consistent actions and improves communication with regulators.

When the compliance function is properly structured, it can not only help the company navigate an investigation but also strengthen its risk management framework in the long term.

How regulators evaluate changes in the compliance team

During a regulatory investigation, supervisory authorities closely monitor any changes in the company’s governance structure, including the appointment of new compliance officers or the expansion of the compliance team. Regulators seek to determine whether such changes are part of a genuine strategy to address identified issues or merely a formal response.

Hiring new specialists is generally viewed positively when it is accompanied by real organizational improvements. However, regulators assess not only the appointments themselves but also the role of new staff in the risk management framework, their independence, and their access to key information.

Particular attention is usually given to the following aspects:

Professional qualifications and experience of new compliance specialists;
The actual authority and independence of the compliance function;
The position of compliance officers within the organizational structure;
Access of the compliance team to transaction and risk information;
Involvement of new staff in developing remediation measures.

Regulators also evaluate how changes to the compliance team fit within the company’s overall governance model. If new employees are appointed only formally and lack sufficient authority or resources, this may raise doubts about the effectiveness of the corrective measures.

For this reason, companies should demonstrate that strengthening the compliance function is part of a broader, systematic approach to risk management and remediation. A transparent reporting structure, documented allocation of responsibilities, and active involvement of compliance officers in decision-making can help build regulatory confidence.

Typical mistakes of companies during regulatory investigations

Regulatory investigations often create significant pressure for businesses. In an effort to resolve the issue quickly, companies sometimes make decisions that increase regulatory scrutiny or complicate the review process. Many problems arise not from the investigation itself but from management’s reaction and the lack of a clear compliance strategy.

Reactive hiring decisions

One common mistake is the rushed hiring of compliance specialists without a clear understanding of their role. Companies may try to demonstrate rapid change to regulators and appoint staff formally without defining their real authority and responsibilities.

As a result, new specialists are not properly integrated into the risk management system, and regulators may view these appointments as a superficial attempt to address the issue without meaningful change.

Lack of transparency with regulators

Another issue is the attempt to limit the disclosure of information or delay providing documents. While companies may seek time for internal analysis, such tactics can raise additional suspicions.

Regulators generally expect transparent cooperation and timely disclosure. Limited openness may lead to closer scrutiny and a deeper review of the company’s structure and compliance processes.

Absence of a clear remediation strategy

Many companies focus only on responding to regulatory requests without developing a structured plan to address identified problems. Without a clear remediation strategy, regulators may question the company’s ability to manage risks effectively.

An effective approach includes identifying the root causes of violations, implementing corrective measures, and documenting changes in the compliance system.

Formal approach to strengthening compliance

Some companies limit their actions to creating new roles or updating internal policies without changing actual risk management processes. However, regulators increasingly evaluate real compliance practices rather than documents alone.

If new policies are not implemented in practice and employees are not involved in internal controls, such changes may be considered purely formal and insufficient.

Lack of coordination between legal and compliance teams

During investigations, it is especially important that the legal team, compliance officers, and company management act in coordination. Poor coordination may result in inconsistent responses to regulators or incorrect risk assessments.

For this reason, companies often establish an internal working group or appoint a coordinator responsible for managing communication between departments and ensuring consistent actions.

Strategy for hiring compliance staff during an investigation

Hiring new compliance specialists during a regulatory investigation should be part of a well-planned strategy rather than a reaction to regulatory pressure. It is important not only to recruit qualified professionals but also to properly integrate them into the existing risk management and corporate control framework.

In such situations, regulators pay close attention to how logically the compliance structure is organized and what role new employees play in addressing identified violations. Therefore, companies should clearly define the tasks, authority, and position of new specialists within the governance model.

An effective hiring strategy usually includes several key elements:

Clear definition of the role and responsibilities of new compliance specialists;
Recruitment of candidates with experience in regulated industries;
Independence of the compliance function from commercial departments;
Transparent allocation of responsibilities between the existing and new team;
Documentation of changes in the risk management and compliance framework.

Timing is also important. During an investigation, new employees must quickly engage in risk analysis, preparation of responses to regulators, and development of remediation measures. For this reason, companies often prioritize candidates with experience in regulatory reviews or internal investigations.

A well-structured hiring strategy can strengthen the compliance function and demonstrate to regulators that the company is systematically addressing identified issues and reinforcing internal controls.

How Structum helps companies during regulatory investigations

Regulatory investigations require companies not only to react quickly but also to take a strategic approach to managing compliance risks. In such situations, it is crucial to structure interactions with regulators properly, strengthen internal controls, and, when necessary, involve specialists capable of managing the remediation process effectively.

Structum team assists international companies, fintech projects, and regulated businesses in developing effective compliance strategies during regulatory reviews. Our specialists support clients at every stage of an investigation: from risk assessment and documentation preparation to remediation planning and communication with supervisory authorities.

Within this area, we provide comprehensive support, including:

Analysis of regulatory risks and assessment of the current compliance framework;
Advisory on building or strengthening a compliance team during investigations;
Audit of AML/CTF procedures and internal control systems;
Development of remediation plans and corrective measures;
Preparation of responses to regulatory requests and support in communication with authorities;
Advisory on corporate governance and allocation of responsibilities;
Assistance with restructuring the compliance function.

If your company is facing a regulatory review or investigation, the Structum team can help assess current risks, develop an effective compliance strategy, and prepare the organization for interaction with regulators. Contact us to discuss your situation and receive professional support.