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2025 the year of growth, creativity and strategic regulatory transformation!
Thinking about your regulatory priorities? Here are some of the global regulatory trends we may expect to see in 2025 and a few tips on how to strategically address them:
1. Regulators actively encouraging innovation
With an increasing need for governments to support the growth and competitiveness of their economies, the spotlight will be on the regulators to remove barriers to product innovation and encourage cost effective regulatory compliance solutions that will lead to improved products and services at reduced prices for consumers.
Where regulators have created the opportunity for a dialogue on the development of regulations and/or feedback on their approach, that is opportunity not to be missed for a fast growing, customer focused business. Sharing useful insights and explaining in a precise way the practical impact of regulation, particularly on customers, can help shape the regulatory landscape in a way that is consumer focused and avoids disconnect between policy, law and practical implementation. The consultation on the AML/CTF rules in Australia is one such opportunity.
2. A continuing RegTech revolution!
We are likely to see increased reliance upon automation and generative AI to streamline and scale regulatory compliance processes, generate efficiencies and reduce compliance costs, particularly in AML/CTF. Regulators will also continue to use RegTech to enhance their supervision and enforcement capabilities, which may lead to a greater breadth of oversight and enforcement activity.
With heightening competition in the RegTech market (check out FinTech Global’s list of the most innovative RegTech companies), there may be greater curiosity about:
- how a particular RegTech solution can facilitate (and evidence) regulatory compliance,
- whether it can be seamlessly deployed and
- whether it actually does what it says it does.
Conducting appropriate due diligence at the outset and ongoing assurance is likely to help ensure the benefits of RegTech including compliance costs savings.
3. Managing the commercial and regulatory risks of AI powered technologies
Reliance is likely to be placed on the EU AI Act and jurisdiction specific strategies and policy documents to inform the management of AI risk and predict where regulation may head, enabling organisations to build/reconfigure systems and processes that support regulatory compliance and prevent rework down the track.
As AI regulation continues to evolve, there will be an ongoing need to recognise that AI is not magic and is not risk free. In the absence of specific AI regulation and where there is uncertainty about what you should do, other consumer focused regulatory regimes will need to be considered. Conducting proper assurance over AI and building a strong AI risk management and compliance culture across teams will also be pivotal.
What is unlikely to happen in 2025:
- We are unlikely to see a reduction in AML/CTF enforcement activity with the upward trend continuing
2024 saw approx. 80 AML/CTF enforcement actions globally in 2024 amounting to over ~AUD$5 billion dollars in fines. AML/CTF enforcement activity is likely to continue to trend upwards as regulators look to utilise broad AML/CTF laws to protect consumers from evolving threats including cybercrime, fraud and scams and to uncover other regulatory compliance issues within regulated sectors. Regulated entities may continue to prioritise the mitigation of financial crime risk and AML/CTF compliance over other regulatory risks and regimes to prevent significant loss and reputational damage.
- There is unlikely to be a reduction in the compliance burden as a result of de-regulation in the US
While Trump has rescinded nearly 80 of Biden’s executive actions and directed a regulatory freeze, this shift is unlikely to reduce compliance workloads. Assessing the implications of deregulation on global compliance programs and tailoring measures to align with evolving regulatory agendas will demand significant time and resources.
Navigating complex regulatory landscapes in 2025? Stay tuned for further updates!
#regulation #innovation #globalcompliance #RegTech #AI #AMLCTF