Regulatory compliance is no longer just a cost of doing business—it’s the next frontier of competitive advantage. As financial institutions grapple with evolving AML and KYC mandates, manual processes are buckling under the weight of complexity. Will 2025 be the year regulatory automation becomes a necessity?
In the view of RelyComply, updated regulatory measures have long been a bugbear for financial institutions, and the RegTech industry’s rise over the past decade has reflected this. Solutions that target compliance challenges for specific sectors offer more bespoke techniques than legacy systems, the firm claimed.
While these may have been adequate in the past, they cannot continuously uncover threats to the regulators that matter in real-time, so they fall behind.
RelyComply outlined, “Given the focus on regulatory scrutiny and the costs of compliance that face financial services companies, it’s been a long path to seeing compliance’s positive aspects. Rules are in place to standardise approaches that make global compliance efforts concerted and effective, but the acceptance of that fact feels more widespread than ever.”
With RegTech platforms created to address transparency through audits and streamlined compliance processes, businesses are seeing the possibility of staying ahead of sophisticated criminals using automated features that make complex tasks simple in an ever-changing field such as financial services regulation, RelyComply said.
“When such solutions can patch up AML gaps in fincrime detection, constant monitoring and timely reporting, they curb the associated costs of failed compliance, which have seen high-profile cases in the past few years. This is something many will do their utmost to avoid, and can with technology where initial investment is small compared to regulatory penalties (and reputational repercussions),” the company remarked.
RelyComply concluded, “2025 is the pivotal year for a compliance mindset shift, with many jurisdictions leading the way in mandating AML compliance and driving the competition using RegTech. Although some regions are lagging behind, success stories from future-proofed platforms will put both regulatory measures and digital means in a good light that can be rolled out more and more.”
A pivotal year
2025 is poised to be a pivotal year for regulatory automation, but mass adoption will depend on two critical factors: regulatory clarity and the pace of AI validation. This is the view of chief communications officer and head of marketing at Quantifind Annalisa Camarillo.
She said, “On one hand, the increasing sophistication of AI-powered compliance tools — like automated transaction monitoring, AI-driven risk intelligence, and dynamic sanctions screening — is making regulatory automation not just feasible but essential. Financial institutions recognize the efficiency gains from reducing false positives, streamlining investigations, and accelerating decision-making through AI-driven insights.”
Despite this, Camarillo identifies the primary constraint as regulatory acceptance. “Regulators are cautiously evaluating how AI-driven automation can remain transparent, explainable, and auditable; particularly in sensitive areas like AML, fraud detection, and sanctions compliance. Firms that can demonstrate strong model governance and explainable AI will be at the forefront of this transformation.”
In short, Camarillo believes adoption is accelerating, but trust and regulatory guidance will determine the speed of widespread implementation. She mentioned that as regulators become more comfortable with AI’s role in compliance, the next phase will be full automation of high-volume, low-risk decisions, freeing compliance teams to focus on complex, high-risk investigations.
Accelerated adoption
In the opinion of ComplyExchange, regulatory automation is definitely on the up and up with AI driven solutions changing the compliance landscape across financial institutions. As we head further into 2025, the firm said, we’ll see several factors which will accelerate adoption even more.
The company remarked, “Increasing regulatory scrutiny and the need for real time compliance will drive organisations towards automated solutions. AI tools can process vast amounts of regulatory data, reduce human error and improve reporting accuracy. With advancements in machine learning, natural language processing and blockchain, compliance automation is no longer a concept of the future, it’s a present reality.”
However, several challenges will slow down widespread adoption. “Regulatory uncertainty is a major hurdle. As financial regulators work to define AI governance frameworks, businesses may not fully implement automated compliance solutions without clear guidance. And legacy infrastructure and integration complexities within large financial institutions will slow down seamless automation.”
Despite this, the long-term outlook for regulatory automation is strong. With AI governance frameworks mature, organisations that invest in automation will see cost savings, efficiency and a more proactive approach to compliance.
“The future will see a blend of human expertise and AI driven regulatory solutions to ensure accuracy and adaptability in an ever changing financial landscape.
2025 may not be the year of complete industry wide adoption, but it will be the year where regulatory automation moves from an emerging trend to an important business strategy,” the firm concluded.
Increased awareness
4CRisk.ai COO Supra Appikonda explained that they believe they’re seeing an increasing awareness in the financial sector of the benefits of AI in regulatory and compliance – it has become table stakes for competitiveness and agility, going beyond mere compliance, he claims.
Appikonda remarked, “As financial firms spend more than 10 per cent of revenues keeping pace with over 200+ changing regulations daily, they feel the urgency to automate, since over 50 per cent of that spend is on manual systems and human capital. With advances in AI-powered regulatory change and compliance, firms can complete key tasks up to 50 x faster – from scanning the horizon for changes, using AI to filter through the noise, to pinpointing what changes affect them and how, through to AI-recommended wording changes in risk, policies, procedures and even contract terms required by upcoming changes in regulations, rules, laws and standards.”
He continued, “In addition, firms see AI parse and analyze both unstructured and structured information at unprecedented granular levels. For example, 4CRisk.ai can cut through the process of streamlining and rationalizing duplicate controls and procedures in minutes, rather than the hours, weeks and days it takes manually. It’s difficult for firms not to take advantage of these kinds of efficiencies.”
Appikonda stated that additionally, and specifically in the US, he expects the financial sector to go through a transformation, with regulations changing at both federal and state level – presenting opportunities for merges and new alliances.
He added, “Organizations also must assess the impact of deregulation on their risks, policies, processes and controls, some of which may increase their resilience and performance. While not required by regulations, certain elements may continue to make good business sense.”
A continuation year
Ed Lloyd, managing director and head of sales at AscentAI, said that the firm is seeing a significant uptick in interest from risk, compliance, and digital transformation teams who are all looking at ways to automate and optimize their current operations, with specific focus on AI.
He said, “Driving that interest is a desire for business process acceleration, increasing the accuracy of their compliance activities to better manage risk, reducing costs, and creating true enterprise command and control across all the interconnected teams and processes within their environment.”
From the perspective of AscentAI, 2025 is a continuation of the rapid move to AI automation that began 18 months ago with large financial institutions. Now, mid-sized and smaller firms are also aggressively looking to digitally transform their operations and create a tech stack that unlocks new and faster capabilities.
Lloyd added, “The FinTech sector is one that typically aligns with AI focussed vendors as they have an affinity for using technology to replace manual processes. The regulatory landscape continues to evolve at a rapid rate, and firms large and small are looking to RegTech automation to help them keep pace. We do not foresee a slowdown any time soon.”
Trust and traction
Chief data officer at Corlytics, Oisin Boydell remarked that it looks like the shift has already happened, with 2025 shaping up increasingly to be the year of compliance automation.
He said, “But whether it marks widespread automation depends on two things: trust and traction. On the one hand, we’re seeing meaningful momentum, especially in risk and compliance, where automation is freeing teams from manual, repetitive tasks and enabling faster response to regulatory changes. On the other hand, there is still uncertainty around AI, particularly in relation to risks relating to accuracy and data privacy.”
Boydell went on, “At Corlytics, we’re actively employing AI and GenAI in a way that supports accuracy, transparency and human oversight. But full-scale adoption isn’t just about the tech, it’s about trust in the outputs, especially in high-stakes environments. AI can accelerate regulatory compliance, but only if we get the governance piece right. Also, when used responsibly, AI doesn’t replace human expertise, it extends it. 2025 could be the year, but only for organisations that treat AI not as a kind of a shortcut, but as a system built on data integrity, explainability, transparency and domain expertise.”
No longer optional
According to co-CEO at IMTF, Sebastian Hetzler due to financial transanctions becoming faster and more numerous and regulatory requirements for financial crim compliance growing increasingly complex, AI is no longer an optional choice, but an essential one.
He said, “Advanced RegTech solutions are transforming compliance by enabling real-time AML, immediate risk detection on instant payments, and 24/7 transaction monitoring, making these processes more scalable and cost-effective.”
Recognising these advancements, regulators globally are increasingly embracing machine-readable regulations and encouraging the digitalisation of compliance functions – signalling greater openness to AI-driven solutions. However, key barriers to adoption remain. Challenges such as integrating AI into legacy systems, navigating fragmented regulations across jurisdictions, ensuring data privacy and cybersecurity, overcoming resistance to change, bridging the skills gap, and managing high initial investment costs continue to slow implementation, said Hetzler.
He finished, “While AI and automation will define the future of regulatory compliance, ensuring explainability and maintaining human oversight will be just as critical to fostering trust and accountability.”
Widespread uptake hindered
Business development manager of KYC Portal, Nickii Malia said that whilst regulatory automation is undoubtedly gaining momentum – driven by advancements in AI and the increasing complexity of compliance requirements – widespread uptake may still be hindered by factors such as regulatory uncertainty, the challenge of integrating AI-driven solutions with legacy systems and concerns over transparency and accountability in automated decision-making.
Malia remarked, “However, as financial institutions face mounting pressure to improve efficiency and reduce compliance costs, automation is set to play an increasingly central role. Looking ahead, regulatory compliance will likely evolve towards a more proactive, data-driven approach, with solutions enhancing risk detection, streamlining reporting and ensuring real-time adherence to regulatory requirements.”
Malia explained that KYC Portal is seeing a growing interest from clients in leveraging technology to enhance their compliance processes. She detailed, “Many are looking for solutions that improve efficiency, reduce manual workload and ensure regulatory adherence while maintaining a seamless client experience.
“However, while automation presents clear benefits, challenges remain, such as adapting to evolving regulations, integrating new technology with existing frameworks and addressing concerns around data security and oversight. As financial institutions continue to explore digital transformation in compliance, the focus will likely shift towards balancing automation with regulatory expectations and operational resilience,” she remarked.
A significant window
Saifr strategic risk leader Jon Elvin stated that 2025 and 2026 will be the window of opportunity to substantially advance and adopt automation, particular in regard to tasks and processes supporting regulatory requirements and key risk management controls.
He said, “We are seeing a posture with the new Trump Administration for evaluating, and perhaps reducing some regulatory requirements, while also promoting innovation. Regulatory automation combined with rapidly advancing Artificial Intelligence will intersect to solve many longstanding inefficient and burdensome tasks targeting the sweet spot of multiple stakeholders including Chief Financial Officers, compliance professionals and operational functions. Additionally, more consistent results, reduced cycle times and improved customer and employee experiences will certainly be achieved.”
Despite Elvin believing the path forward is not yet completely mapped and paved to support the speed and safety of an interstate highway, the direction is clear.
He detailed, “As a reminder, responsible innovation should be the guardrail and guiding principle with an emphasis of strong documentation, testing, and AI oversight to monitor outcomes ensuring explainability and any early warning that might detect disparate impact or unintended outcomes. While the referees could throw yellow flags or speed enforcement zones along the way, the destination is exciting.”
He remarked that any major miss for an organisation that does not put these safeguards in place or self-diagnose would likely lead to targeted road closure or ‘do not enter’ space.
“Organizations that do embrace automation and AI, and do so responsibly will benefit much earlier and deeper than peers,” Elvin stated succinctly.
Meanwhile, Saifr head of compliance Allison Lagosh explained, “I think 2025 could be the year for widespread AI regulatory automation for compliance. It seems like a ton of vendors are offering a plethora of services geared to automate manual processes such as scanning content in various formats and distilling complex information in seconds all geared to becoming more efficient and producing quicker outputs. In this current environment of political “hypo-regulation” it would seem like a perfect opportunity for growth and expansion in this arena for years to come.”
AI shifting compliance
MCO’s director of product management, John Kearney believes that AI will continue to shift the compliance landscape in 2025. He noted that gone are the days when compliance officers could rely solely on policy manuals, spreadsheets, and a well-honed gut instinct.
He remarked, “AI can offer efficiency, automation, and insight—but it’s crucial to remember that it also introduces new risks and regulatory scrutiny.”
AI is already reshaping compliance functions with tasks including scanning for regulatory changes, automating risk assessments and detecting suspicious activity. The upside? In this area, Kearney mentioned that AI can dramatically improve compliance efficiency, reduce human error, and even help compliance officers sleep a little better at night. The downside, however, is that without proper oversight, AI can also make bad decisions at scale, introduce bias, and leave firms exposed to regulatory headaches.
What does the shift to AI mean for compliance officers? “Understanding AI’s pitfalls along with it’s potential is essential. AI will only be as good as the humans overseeing it,” Kearney claimed.
The year of mass adoption
In the opinion of CLO at Muinmos, Michael Thirer it is very likely that 2025 will be a year of mass adoption, very much like what happened during COVID.
He said, “The two have clear similarities – COVID was frightening, among other things, as it changed the way we all interacted and worked; similarly, AI is frightening, among other things, as it has the potential to change the way we all interact and work.
“And the same way COVID forced us all to adopt available technological tools – At Muinmos, we saw great adoption of our client onboarding platform during and after COVID – and new work patterns, AI will do as well,” stated Thirer.
It is important to remember, in this context, Thirer explains, that in the end those changes done during COVID – adopting available technological tools and new work patterns – in the end gave as all more options, like the ability to work hybrid, so in his view, change is not necessarily bad, new technologies give us new options.
Meanwhile, co-founder and CEO of Salv, Taavi Tamkivi said “I feel like we’re still in this funny period with AI, where lots of companies are still soul searching. In financial services, you’re dealing with discreet information, regulation and a lot of complexity. So there’s lots of risks to consider and balance. It’s simple enough to have virtual assistants and other cool AI tools working around the edges, but it’s very hard to implement these bulletproof AI systems at true scale, following hard requirements like banking secrecy, GDPR, auditability, data retention.”
He concluded by explaining that in RegTech, we haven’t yet seen the year of AI. That will happen in maybe three or four years time. It will definitely happen, but the industry needs more time,” said Tamkivi.
