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A regulator rarely asks whether you have a policy. They ask whether it works.
That difference is where most programmes come unstuck. On paper, the organisation has an AML policy, a CDD procedure, an escalation route, an internal audit plan. In practice, onboarding decisions vary by team, enhanced due diligence triggers are applied inconsistently, and “temporary” workarounds become embedded. When an inspection or audit happens, the narrative collapses into evidence gaps.
A regulatory compliance gap analysis is the disciplined way to prevent that outcome. Done properly, it does not produce a generic list of best practices. It gives you a defensible view of what the rules require, what your business actually does, where the mismatches sit, and which fixes reduce regulatory and reputational risk fastest.
What a regulatory compliance gap analysis really is
A gap analysis is often treated as a mapping exercise: requirement on the left, policy on the right, tick the boxes. That is a compliance comfort blanket, not a risk tool.
A credible regulatory compliance gap analysis tests three layers at once. First, it checks whether your documented framework reflects the obligations you are subject to (including jurisdictional nuances and regulator guidance). Second, it examines whether operational controls actually execute that framework, day-to-day. Third, it measures whether there is evidence – audit trails, approvals, monitoring outputs, management information – that demonstrates effectiveness.
Those layers matter because compliance failures are rarely caused by a single missing policy. They usually come from weak control design, fragmented ownership, poor data quality, or governance that does not force decisions to be recorded. A gap analysis should identify those root causes, not just label the gap.
When you need one (and what usually triggers it)
Most firms wait until they feel pressure: a board request, an audit finding, a new product launch, or a regulator communication. There is nothing wrong with responding to a trigger, but timing affects cost and disruption.
If your organisation is expanding into new markets, onboarding new customer types, outsourcing parts of onboarding, or scaling transaction volumes quickly, gaps appear even when the core framework is sound. Equally, if you have recently changed MLRO, compliance leadership, or onboarding systems, you should expect control drift while teams adjust.
A gap analysis is also valuable after a period of “quiet” operation. When nothing breaks, teams assume the programme is stable. In reality, regulatory expectations evolve, typologies change, and staff apply shortcuts to keep up with growth. The absence of incidents is not proof of compliance, particularly in AML.
The scope decision that determines whether it works
The most common reason gap analyses disappoint is scope. Too broad, and the output becomes a high-level report that no one can implement. Too narrow, and you fix the wrong thing while bigger exposures remain.
Start by being explicit about the regulatory perimeter and the business perimeter. Regulatory perimeter means the exact regimes, rules, guidance, and licence conditions that apply to you, including where you operate and who you serve. Business perimeter means the products, customer segments, delivery channels, third parties, and systems that create your real exposure.
For many AML-regulated businesses, the most useful approach is to anchor scope around the customer lifecycle: risk assessment (including your Business Risk Assessment), onboarding and CDD, ongoing monitoring, escalation and SAR/STR decision-making, record-keeping, training, governance, and independent testing. That structure keeps the analysis connected to how risk is actually managed.
How to run the analysis without creating a paper exercise
1) Translate obligations into testable expectations
Regulations and guidance often use language that is deliberately outcome-focused: “effective”, “adequate”, “risk-based”, “proportionate”. Those words are not vague if you convert them into expectations that can be tested.
For example, “risk-based CDD” becomes: documented risk factors, defined scoring methodology, clear triggers for EDD, approval thresholds, and a review cadence linked to risk. “Ongoing monitoring” becomes: defined scenarios or monitoring rules, governance over alerts, quality checks, and evidence that thresholds are reviewed when typologies shift.
This step is where many firms either over-engineer (building requirements that exceed practical need) or under-shoot (keeping expectations so generic that anything passes). The right level depends on your risk profile, customer base, and regulatory scrutiny.
2) Map your current framework, then challenge it
Collecting policies, procedures, and templates is necessary, but not sufficient. The real work is in identifying contradictions, missing decision points, and areas where the documents assume capabilities you do not have.
A typical example is source of funds and source of wealth requirements. Policies may define what must be obtained, but operationally the firm may not have data fields, training, or escalation routes to enforce it. Another is reliance on third parties or introducers: the policy may permit it, but contracts, assurance testing, and evidence of timely data transfer may be weak.
The mapping should end with a simple question: if a new joiner followed these documents exactly, would they reach a defensible decision every time?
3) Test controls in the workflow, not just on paper
A gap analysis that never touches case files, system logs, or management information is largely speculative. Control testing does not have to look like a full internal audit, but it must be grounded in real activity.
Sampling onboarding files, reviewing risk scoring outputs, checking EDD rationales, and tracking how escalations are handled will reveal where process design and operational reality diverge. It also exposes whether evidence is being created as a by-product of doing the work, or whether teams are reconstructing rationales after the fact.
Where possible, trace end-to-end: initial risk assessment, CDD collection, screening outcomes, decision approvals, review triggers, and monitoring. The gaps that matter most often sit at handoffs between teams or systems.
4) Assess governance as a control, not an afterthought
Governance is not a section at the back of the report. It is a control environment that determines whether gaps stay fixed.
A good gap analysis checks whether ownership is clear (who is accountable for policy, operations, systems, and assurance), whether reporting gives decision-makers the right view of risk, and whether issues are tracked to closure. It also tests whether the board or senior management receives meaningful MI: not just volumes, but quality indicators, backlogs, overrides, and trend analysis.
If governance is weak, even strong technical controls will degrade under pressure.
5) Prioritise remediation by risk, not by ease
The remediation plan is where “effortless compliance” either becomes reality or remains a slogan. Prioritisation should be driven by exposure and regulatory expectations, balanced against delivery constraints.
High-impact gaps typically include inconsistent customer risk assessments, weak EDD triggers, poor sanctions and PEP screening governance, inadequate ongoing monitoring, and lack of independent testing. However, there is a genuine trade-off: some of the most material fixes require system change, vendor configuration, or process redesign, which take time.
A practical approach is to define immediate stabilisers (quick controls that reduce exposure now), medium-term fixes (process and training improvements), and structural remediation (systems, data, and operating model). That sequencing avoids the trap of “fixing” only what can be done in a week.
Common gaps in AML and onboarding programmes
Certain issues recur across regulated sectors, from fintechs to gaming operators to corporate service providers.
One is over-reliance on generic risk scoring. If the model is not calibrated to your customer base, staff stop trusting it and begin overriding it informally. Another is inconsistent EDD application: teams know EDD is required, but the rationale for what was obtained and why it is sufficient is thin.
A third is record quality. Firms do the work but cannot evidence it cleanly: missing approvals, undocumented decisions, incomplete audit trails. This is where reputational risk and regulatory exposure spike, because it becomes difficult to show that risk was managed intentionally.
Finally, there is often a gap between the Business Risk Assessment and operational controls. The BRA identifies higher-risk channels or customer types, but procedures and monitoring do not change accordingly. Regulators expect that link to be visible.
What “good” looks like in the deliverable
A gap analysis report should be readable by executives and usable by operators. If it only speaks to one audience, it will fail.
At a minimum, it should set out the applicable requirements, the current state, the gap, the risk implication, and a clear recommendation with ownership and target dates. The best reports also include examples from testing (anonymised), so teams understand the behaviour that needs to change.
Avoid recommendations that are technically correct but operationally vague, such as “enhance monitoring” or “improve training”. A better recommendation specifies what must change: the monitoring scenarios to add, the threshold governance to implement, the training audience and competence checks, or the approvals that must be embedded into the workflow.
Build for scrutiny, not for perfection
There is a temptation to treat gap analysis as a route to a perfect framework. That is not realistic in fast-moving, regulated environments.
Regulators and auditors generally look for something more pragmatic: a programme that is risk-based, consistently applied, appropriately governed, and continuously improved. If you can demonstrate that you identify gaps early, assess their impact honestly, and remediate them with discipline, you are in a far stronger position than a firm that produces beautiful documents but cannot show control performance.
This is also where independence helps. An external view can challenge assumptions, benchmark your approach against regulatory expectations, and test controls without internal bias. Where that support is needed, Complipal delivers advisory-led compliance and internal audit work that turns gap analysis findings into implementable controls, not just commentary.
A useful closing test is simple: if your regulator asked tomorrow, “show us how your onboarding and AML controls actually prevent and detect risk”, would your evidence tell a clear story without last-minute reconstruction? If not, the gap analysis is not a project. It is a protective discipline that gives your organisation room to grow with confidence.
Regulatory Compliance Gap Analysis That Holds Up
A regulator rarely asks whether you have a policy. They ask whether it works.
That difference is where most programmes come unstuck. On paper, the organisation has an AML policy, a CDD procedure, an escalation route, an internal audit plan. In practice, onboarding decisions vary by team, enhanced due diligence triggers are applied inconsistently, and “temporary” workarounds become embedded. When an inspection or audit happens, the narrative collapses into evidence gaps.
A regulatory compliance gap analysis is the disciplined way to prevent that outcome. Done properly, it does not produce a generic list of best practices. It gives you a defensible view of what the rules require, what your business actually does, where the mismatches sit, and which fixes reduce regulatory and reputational risk fastest.
What a regulatory compliance gap analysis really is
A gap analysis is often treated as a mapping exercise: requirement on the left, policy on the right, tick the boxes. That is a compliance comfort blanket, not a risk tool.
A credible regulatory compliance gap analysis tests three layers at once. First, it checks whether your documented framework reflects the obligations you are subject to (including jurisdictional nuances and regulator guidance). Second, it examines whether operational controls actually execute that framework, day-to-day. Third, it measures whether there is evidence – audit trails, approvals, monitoring outputs, management information – that demonstrates effectiveness.
Those layers matter because compliance failures are rarely caused by a single missing policy. They usually come from weak control design, fragmented ownership, poor data quality, or governance that does not force decisions to be recorded. A gap analysis should identify those root causes, not just label the gap.
When you need one (and what usually triggers it)
Most firms wait until they feel pressure: a board request, an audit finding, a new product launch, or a regulator communication. There is nothing wrong with responding to a trigger, but timing affects cost and disruption.
If your organisation is expanding into new markets, onboarding new customer types, outsourcing parts of onboarding, or scaling transaction volumes quickly, gaps appear even when the core framework is sound. Equally, if you have recently changed MLRO, compliance leadership, or onboarding systems, you should expect control drift while teams adjust.
A gap analysis is also valuable after a period of “quiet” operation. When nothing breaks, teams assume the programme is stable. In reality, regulatory expectations evolve, typologies change, and staff apply shortcuts to keep up with growth. The absence of incidents is not proof of compliance, particularly in AML.
The scope decision that determines whether it works
The most common reason gap analyses disappoint is scope. Too broad, and the output becomes a high-level report that no one can implement. Too narrow, and you fix the wrong thing while bigger exposures remain.
Start by being explicit about the regulatory perimeter and the business perimeter. Regulatory perimeter means the exact regimes, rules, guidance, and licence conditions that apply to you, including where you operate and who you serve. Business perimeter means the products, customer segments, delivery channels, third parties, and systems that create your real exposure.
For many AML-regulated businesses, the most useful approach is to anchor scope around the customer lifecycle: risk assessment (including your Business Risk Assessment), onboarding and CDD, ongoing monitoring, escalation and SAR/STR decision-making, record-keeping, training, governance, and independent testing. That structure keeps the analysis connected to how risk is actually managed.
How to run the analysis without creating a paper exercise
1) Translate obligations into testable expectations
Regulations and guidance often use language that is deliberately outcome-focused: “effective”, “adequate”, “risk-based”, “proportionate”. Those words are not vague if you convert them into expectations that can be tested.
For example, “risk-based CDD” becomes: documented risk factors, defined scoring methodology, clear triggers for EDD, approval thresholds, and a review cadence linked to risk. “Ongoing monitoring” becomes: defined scenarios or monitoring rules, governance over alerts, quality checks, and evidence that thresholds are reviewed when typologies shift.
This step is where many firms either over-engineer (building requirements that exceed practical need) or under-shoot (keeping expectations so generic that anything passes). The right level depends on your risk profile, customer base, and regulatory scrutiny.
2) Map your current framework, then challenge it
Collecting policies, procedures, and templates is necessary, but not sufficient. The real work is in identifying contradictions, missing decision points, and areas where the documents assume capabilities you do not have.
A typical example is source of funds and source of wealth requirements. Policies may define what must be obtained, but operationally the firm may not have data fields, training, or escalation routes to enforce it. Another is reliance on third parties or introducers: the policy may permit it, but contracts, assurance testing, and evidence of timely data transfer may be weak.
The mapping should end with a simple question: if a new joiner followed these documents exactly, would they reach a defensible decision every time?
3) Test controls in the workflow, not just on paper
A gap analysis that never touches case files, system logs, or management information is largely speculative. Control testing does not have to look like a full internal audit, but it must be grounded in real activity.
Sampling onboarding files, reviewing risk scoring outputs, checking EDD rationales, and tracking how escalations are handled will reveal where process design and operational reality diverge. It also exposes whether evidence is being created as a by-product of doing the work, or whether teams are reconstructing rationales after the fact.
Where possible, trace end-to-end: initial risk assessment, CDD collection, screening outcomes, decision approvals, review triggers, and monitoring. The gaps that matter most often sit at handoffs between teams or systems.
4) Assess governance as a control, not an afterthought
Governance is not a section at the back of the report. It is a control environment that determines whether gaps stay fixed.
A good gap analysis checks whether ownership is clear (who is accountable for policy, operations, systems, and assurance), whether reporting gives decision-makers the right view of risk, and whether issues are tracked to closure. It also tests whether the board or senior management receives meaningful MI: not just volumes, but quality indicators, backlogs, overrides, and trend analysis.
If governance is weak, even strong technical controls will degrade under pressure.
5) Prioritise remediation by risk, not by ease
The remediation plan is where “effortless compliance” either becomes reality or remains a slogan. Prioritisation should be driven by exposure and regulatory expectations, balanced against delivery constraints.
High-impact gaps typically include inconsistent customer risk assessments, weak EDD triggers, poor sanctions and PEP screening governance, inadequate ongoing monitoring, and lack of independent testing. However, there is a genuine trade-off: some of the most material fixes require system change, vendor configuration, or process redesign, which take time.
A practical approach is to define immediate stabilisers (quick controls that reduce exposure now), medium-term fixes (process and training improvements), and structural remediation (systems, data, and operating model). That sequencing avoids the trap of “fixing” only what can be done in a week.
Common gaps in AML and onboarding programmes
Certain issues recur across regulated sectors, from fintechs to gaming operators to corporate service providers.
One is over-reliance on generic risk scoring. If the model is not calibrated to your customer base, staff stop trusting it and begin overriding it informally. Another is inconsistent EDD application: teams know EDD is required, but the rationale for what was obtained and why it is sufficient is thin.
A third is record quality. Firms do the work but cannot evidence it cleanly: missing approvals, undocumented decisions, incomplete audit trails. This is where reputational risk and regulatory exposure spike, because it becomes difficult to show that risk was managed intentionally.
Finally, there is often a gap between the Business Risk Assessment and operational controls. The BRA identifies higher-risk channels or customer types, but procedures and monitoring do not change accordingly. Regulators expect that link to be visible.
What “good” looks like in the deliverable
A gap analysis report should be readable by executives and usable by operators. If it only speaks to one audience, it will fail.
At a minimum, it should set out the applicable requirements, the current state, the gap, the risk implication, and a clear recommendation with ownership and target dates. The best reports also include examples from testing (anonymised), so teams understand the behaviour that needs to change.
Avoid recommendations that are technically correct but operationally vague, such as “enhance monitoring” or “improve training”. A better recommendation specifies what must change: the monitoring scenarios to add, the threshold governance to implement, the training audience and competence checks, or the approvals that must be embedded into the workflow.
Build for scrutiny, not for perfection
There is a temptation to treat gap analysis as a route to a perfect framework. That is not realistic in fast-moving, regulated environments.
Regulators and auditors generally look for something more pragmatic: a programme that is risk-based, consistently applied, appropriately governed, and continuously improved. If you can demonstrate that you identify gaps early, assess their impact honestly, and remediate them with discipline, you are in a far stronger position than a firm that produces beautiful documents but cannot show control performance.
This is also where independence helps. An external view can challenge assumptions, benchmark your approach against regulatory expectations, and test controls without internal bias. Where that support is needed, Complipal delivers advisory-led compliance and internal audit work that turns gap analysis findings into implementable controls, not just commentary.
A useful closing test is simple: if your regulator asked tomorrow, “show us how your onboarding and AML controls actually prevent and detect risk”, would your evidence tell a clear story without last-minute reconstruction? If not, the gap analysis is not a project. It is a protective discipline that gives your organisation room to grow with confidence.
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