Regulatory Gaps Slow US AI Compliance Adoption

In 2010, endurance athlete Joe De Sena held the first Spartan Race in Williston, Vermont — an obstacle course race created to test the endurance of participants. The race was a hit, and since then, Spartan Races have become extremely popular among fitness enthusiasts and are now regularly held across the US and in 30 other countries around the world. People participate in Spartan Races to challenge both their endurance and mental fortitude, as in addition to running, participants must circumvent a wide range of obstacles such as crawling through mud and under barbed wires, climbing walls, carrying heavy objects, and even swimming. For many people who compete in these events, success is determined by merely completing a course, not necessarily by doing so faster than anyone else.It is probably safe to say that the average compliance expert within the banking industry doesn’t participate in Spartan Races, but that doesn’t mean they don’t understand the importance of navigating obstacles. Ensuring compliance within financial institutions (FIs) has always meant the need to stay on top of ever-changing rules and regulations, but as federal oversight has decreased this year, the resulting patchwork of state regulations has become increasingly difficult for FIs to navigate. As a result, US FIs are trailing their peers when it comes to making progress with incorporating artificial intelligence (AI) into compliance. How the US Stacks Up in AI-Backed Compliance According to the 2025 Global Relay annual compliance report, 71.4% of FIs in Europe, the Middle East, and Africa (EMEA) plan to incorporate AI into their compliance systems, compared with only 43.7% of FIs in the US and 61.5% in the rest of the world. Among those already using AI, EMEA and the US trail the rest of the world: only 32% of FIs in North America and 33.3% in EMEA currently use AI in compliance workflows, versus 41.2% of their peers elsewhere. The gap underscores the challenges US FIs face in adopting emerging compliance technology.Regulation is a major factor impacting the approach that FIs have taken to AI-enhanced compliance. In the EU, FIs have been given fairly clear guidance on regulators’ approach to overseeing AI compliance through the EU AI Act, which outlines how actively the usage of specific AI systems will be regulated based on the overall risks they pose. By contrast, the US lacks comprehensive federal direction, resulting in greater uncertainty for financial institutions considering AI adoption.The Impact of DeregulationIn the US, however, there is less clarity. Not only did Trump’s re-election represent a changing of the guard at the White House, but it also meant a 180-degree turnaround in terms of the government’s approach to overall regulation, particularly regarding the financial industry. The current administration is pursuing a deregulation approach and has sought to roll back many of the policies that previous administrations put in place for banking oversight. The Consumer Financial Protection Bureau (CFPB) saw much of its reach nullified, and the Securities and Exchange Commission (SEC) has significantly scaled back its staff and revoked the ability of the Director of the Division of Enforcement to initiate formal investigations, which must now be authorized by a majority vote of the commissioners. The administration’s pro-cryptocurrency approach also saw the elimination of the Department of Justice’s National Cryptocurrency Enforcement Team. State Regulations Add ComplexityIn response to reduced federal oversight, states such as California, New York, Illinois, and Washington have increased enforcement of financial and digital activities. This state-by-state approach has created a patchwork of evolving regulations that is particularly challenging for FIs operating across multiple jurisdictions. Compliance teams not only face higher costs but also increased operational risk, especially when integrating new AI-driven systems.Tips for Managing Changing RegulationsNavigating compliance in a fragmented regulatory environment requires proactive steps — especially when planning for AI integration. The following approaches can help position your institution to adapt quickly and confidently as oversight continues to evolve:

While US financial institutions face slower progress in AI-backed compliance due to fragmented oversight, the regulatory landscape will not remain static. Institutions that monitor developments closely, engage with regulators, and begin shaping AI strategies now will be better positioned to act when clearer federal and state frameworks emerge. By laying the groundwork today, FIs can move quickly to implement AI tools that enhance compliance efficiency and effectiveness once the path forward becomes clearer.