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Many people believe that we have entered a time of pullback in regulatory intensity. While that is likely true, it ironically points to a tremendous opportunity for financial crime compliance (FCC) leaders who have long wanted to try new things but felt too constrained by fears of running afoul of strict regulatory regimes.
Is a regulatory pullback actually upon us?
Well, the administration expressed in a February 19, 2025, White House Fact Sheet that it is focused on “Deconstruction of the Unconstitutional Administrative State” and promoting a free market, leading to a more relaxed regulatory environment. This was followed quickly by a U.S. Treasury Department press release in March that said Treasury (FinCEN) will not enforce any penalties or fines associated with the beneficial ownership information (BOI) reporting rule nor enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after new rule changes take effect.
Then, on April 7th, Deputy Attorney General Todd Blanche issued a memorandum that states the DOJ will stop targeting virtual currency exchanges and crypto service providers for the actions of their end users or for “unwitting” violations of regulations (except when defrauding customers and investors or unlawful conduct by cartels and terrorists). According to The Conference Board, the memo specifically instructs prosecutors not to charge regulatory violations against unlicensed money transmitters, violations of the Bank Secrecy Act, offering unregistered securities, and other violations unless there is evidence that the violations were committed knowingly (a very high standard in criminal law).
Combine these examples with Treasury’s recent elimination of multiple other regulations, and one would have to conclude that we are definitely experiencing a pullback in federal regulatory intensity.
All this freedom, so many choices
So, now that federal-level regulatory risk is lessened for at least several years to come, do FCC leaders simply sit back and enjoy the peace and quiet?
Doubtful.
We hear quite often that there are numerous things they would like to do if given extra time, like bringing in new training programs, adopting new procedures, or contributing more to digital transformation efforts. Then, of course, there’s the 800-pound gorilla in the room – adopting some form of AI to streamline processes and make operations run more smoothly and efficiently.
Is now the time to dip your FCC toe into the AI waters? Our answer: Yes, if AI could be part of a large-impact project and make an impact itself.
You see, the regulatory environment isn’t so relaxed that you can just try things without consequences. You still must deliver results, ROI, and steps toward digital transformation. As FCC leaders, you will still be held accountable for the value of the projects you undertake. So ask yourself, “What things will have the biggest impact on our operations for the next five years?” Those are the things you should pursue, and if AI supports them, then great. You will gain both AI skills and the knowledge of AI’s capabilities and limitations – based on your specific organization’s needs.
Types of projects to use AI
The good news is that small projects that leverage AI can have a really large impact on FCC operations. For example, many of our customers start with using an AI Agent to perform sanctions alert reviews at Level1. Others start their AI journey by using an AI Agent for adverse media monitoring clearing.
What’s unique about these uses of AI for highly defined FCC operations is that they typically involve just 3 to 6 months of effort, whereas traditional technology adoption projects require 18-36 months. So, there’s no need to start big and boil the BSA/AML/CFT ocean.
Consider how Raymond James adopted WorkFusion’s Evelyn. Evelyn automates entity data matching for Raymond James’ perpetual screening process for name sanctions, politically exposed persons (PEPs), and adverse media alerts. With a project that took less than six months from start to finish, Raymond James’ AML and Financial Crime Risk Management team now automates over 50 percent of false positive decisioning with 70% reduction in manual effort.
Imagine if your organization did something like that. Could you easily get approval for the next AI Agent, like Tara for sanctions alert reviews? It’s highly likely.
Payments have become a booming business for banks in recent years, and Valley Bank began their FCC AI journey with WorkFusion’s AI Agent named Tara. Tara automates Valley’s sanctions alert adjudication for faster payments. In just a matter of months, they were able to automate 65 percent of sanctions hit reviews (22,000 monthly) and enable much faster payments while dramatically reducing risk of errors.
AI Agents are additive, not replacement technology
One thing that dissuades buyers of any new technology is that they often must run two systems in parallel for some time, until they eventually replace or sunset the older system. That does not happen with AI Agents. Instead, you leave your existing systems (e.g. case management, transaction monitoring) in place. The AI Agent simply acts like an additional worker that taps into those systems to gather the information it needs to do its job.
For organizations that are chronically understaffed, face surges in KYC and/or alert demands, or even have longstanding alert backlogs to clear, the problem is solved rapidly with an AI Agent.
Returning to the question of whether you can sit back and enjoy the peace and quiet during a lower-intensity regulatory environment, perhaps you can do that while also starting down the path to AI-driven digital transformation in your FCC operations.
To learn more, request a demo of one or more AI Agents today.