DEVELOPMENT OF COMPLIANCE MANAGEMENT IN DOMESTIC BANKING PRACTICE

Abstract

This article is devoted to the analysis of problems and prospects for the development of compliance management in the Ukrainian banking sector, which operates in conditions of full-scale war, economic instability, and active European integration processes. Key challenges facing domestic banks are explored, including insufficient harmonization with European standards such as PSD2 and GDPR, a low level of digitalization, high cyber risks, and limited institutional capacity of banks. The development of compliance management is closely linked to the implementation of digital technologies, particularly RegTech (regulatory technologies). RegTech includes automated systems for monitoring transactions, assessing risks, and ensuring compliance with standards such as GDPR and Basel III. Examples from individual Ukrainian banks demonstrate the successful implementation of such technologies for detecting suspicious operations, contributing to reduced compliance risks and greater operational transparency. However, it is argued that the overall level of investment in RegTech in Ukrainian banks remains relatively low, indicating untapped potential for digitalization in the sector. The integration of ESG criteria (environmental, social, and governance) into compliance practices, which is relevant for Ukraine in the context of green transformation and European integration, is also examined. It is noted that the inclusion of ESG criteria in banks' compliance management systems allows for improved identification of risks associated with climate change, social conflicts, or corporate governance violations. Furthermore, the integration of ESG criteria into compliance management enables banks to reduce reputational and financial risks and promote financial inclusion. A comprehensive approach to integrating compliance management with digital tools is proposed, including process automation through RegTech platforms, the integration of ESG criteria, staff training, and cooperation with international organizations. This model is aimed at increasing transparency, reducing risks, and promoting the post-war reconstruction of Ukraine, as well as adapting to European standards. The war is emphasized as a significant obstacle to the implementation of compliance management, as it intensifies cyber threats, increases economic instability, and limits access to resources for technology investment.