Given the huge compliance fines banks have paid, how can they reduce human error—perhaps with checklists—to avoid such failures?

Implementing compliance on the whole is a pretty difficult thing to do. Compliance itself has so many rulesets (some which can be programmed) and many that simply cannot be inserted directly and rely on controls that are juxtaposed to the processes that are prevalent in a financial institution. Such forced sets usually work in batch process settings and not in real-time.

The legal and compliance softwares that exist are so inherently difficult and cumbersome to setup and operate. Then one small slip and a transaction that was supposed to be flagged/stopped, slips away.

Every now and then you will come across rules or instructions from the regulator that simply is not easy to implement. If you ever looked at say the net worth requirement or associated fees as the State of Texas or Washington would require of a Money Transmitter - the equation would make you go crazy.

Because of the multiple systems, that are in play, they don't necessarily talk to each other, like one would assume. There is so much bandage fixing, that its not even funny.

Then above all, there is the willful default. The Managers and Operations people who knowingly allow gaps to remains so they can meet quotas or have been told to turn a blind eye.

Many-a-times the Risk & Compliance departments are not told the full story (even by the senior management).

The variables are plenty.

Lists / Checklists, etc. are all good if they are followed meticulously, and any anomalies or breaches reported. With the amount of firefighting going on in banks, the truth rarely surfaces and when it does, it brings out the nasty side of the regulators.