Navigating financial services regulatory compliance in 2025

TD Bank's historic $3.09 billion penalty sent shockwaves through compliance departments everywhere — for a good reason. It was the largest penalty ever imposed under the Bank Secrecy Act, and it happened to an institution that most would consider sophisticated and well-resourced.

But that's not an isolated case. In 2024, global financial penalties reached $4.6 billion, with 95% coming from North American regulatory authorities. Banks alone faced $3.65 billion in fines — a staggering 522% increase from the previous year.

What's particularly interesting about these enforcement actions isn't just their size. It's their scope.

Regulatory bodies want more these days and expect that your organization shows control effectiveness and active risk governance beyond basic documentation. They want robust, integrated systems that demonstrate real-time control effectiveness and genuine cross-functional collaboration.

If you build your financial services compliance program to account for this, you’re ahead of most peers. In this article, we’ll explain how compliance works in the financial sector and how you can build a strong program.

What is regulatory compliance in the financial services industry?

Financial services regulatory compliance refers to regulations that apply to financial institutions like banks, insurance companies, brokers, and asset managers.

Most compliance professionals have been taught that regulatory compliance is fundamentally defensive — avoid fines, stay out of trouble with regulatory authorities, check the boxes, and file the reports. While this is understandable, given the pressure you face daily, this mindset misses the bigger opportunity.

You need to focus on building compliance programs that mitigate financial and reputational risk through integrated and proactive controls. It's about creating integrated processes that connect compliance, risk management, and internal audit functions to provide real-time visibility into your regulatory posture.

Examples of finance-specific regulations and frameworks

Here are a few regulations and frameworks that apply to financial institutions:

• SOX (Sarbanes-Oxley Act): Financial reporting controls and executive accountability for public companies — it requires systematic documentation and testing of internal controls over financial reporting
• GLBA (Gramm-Leach-Bliley Act): Customer data protection and privacy requirements for financial information, including safeguarding rules and data sharing restrictions
• FFIEC Guidelines: Technology risk management and cybersecurity standards covering information security programs, vendor management, and incident response procedures
• Securities Exchange Act of 1934 (17 CFR 240): Governs securities transactions, broker-dealer registration and conduct, market manipulation prevention, and disclosure requirements for publicly traded companies
• Safety and Soundness Standards (12 CFR 30): Establishes minimum standards for loan portfolio management, internal controls and information systems, internal audit systems, credit underwriting, interest rate exposure, and asset growth requirements for national banks
• FINRA Rules: Broker-dealer conduct, market integrity, and customer protection in capital markets, including supervision requirements and transaction reporting
• Bank Secrecy Act (BSA) and AML: Anti-money laundering reporting and suspicious activity monitoring that requires comprehensive customer due diligence and transaction monitoring
• Swap Dealers and Major Swap Participants (17 CFR 23): Registration, capital and margin requirements, business conduct standards, and risk management procedures for entities engaged in swap dealing activities, including transaction reporting and clearing requirements
• GDPR: Data privacy and protection requirements for EU customer data and sensitive data processing by financial institutions with European operations
• PCI DSS: Payment card industry data security standards for customer data protection, covering network security and access controls

Who’s responsible for financial services compliance?

While compliance officers certainly play a central role, there are several roles you should consider hiring for:

• Compliance officers: Strategically orchestrates regulatory requirements by developing policies, managing regulatory change processes, coordinating training programs, and serving as primary liaisons with regulatory authorities — for example, they make sure you comply with OCC standards on credit risk management
• Risk managers: Conducts enterprise risk assessments and maintains control testing programs while quantifying compliance risk and monitoring control effectiveness — for example, they work under FFIEC guidelines for cybersecurity compliance and maintain control testing for SOX compliance
• Internal audit: Provides independent validation through testing, control validation, and remediation tracking for regulatory authorities while verifying that compliance processes work as designed — for example, they validate AML transaction monitoring systems and test GLBA safeguarding controls for customer data protection
• Infosec teams: Manages data security, cyber attack prevention, and third-party risk management for sensitive data, which is essential for compliance programs dependent on data protection — for example, they implement PCI DSS network security controls for payment card data.
• IT compliance specialists: Oversees system controls, data breach prevention, and service provider oversight while ensuring technology systems support compliance requirements — they would be responsible for SOX financial reporting or GLBA and GDPR compliance
• Legal teams: Handles regulatory interpretation and consumer protection compliance and liaises with regulatory bodies while translating legal requirements into business processes — for example, they would be responsible for interpreting SEA requirements for public company disclosures

Financial institutions, ahead of compliance, understand that compliance with modern financial services isn't a departmental responsibility — it's an institutional capability.

Top regulatory challenges for financial institutions

In 2024, more organizations have started taking compliance seriously. What used to be manageable challenges have turned into make-or-break issues that keep executives awake at night.

Below, we’ve explained a few themes we notice time and again when it comes to compliance:

1. There’s a lack of standardization in global compliance standards

If you're operating across multiple jurisdictions, you know the pain of mismatched global standardization. The US has one set of expectations for AI governance. The EU has completely different requirements under its new AI Act.

Also, in 2025, political tensions drive regulators to prioritize national interests over international coordination.

The Basel Committee acknowledges that the appetite for global policy changes has reduced recently. At the same time, unilateral policy changes within jurisdictions are increasing the gaps within the global policy environment.

Take operational resilience as an example. US regulators want to see specific capabilities around third-party risk management. EU regulators implementing the DORA (Digital Operational Resilience Act) want something else entirely, with high-level areas of focus on critical third-party management.

Technologies such as artificial intelligence (AI) will only complicate this further — especially as new laws like the EU AI Act come into force.

2. We’re entering the era of zero tolerance

Regulatory enforcement has fundamentally shifted from warnings and consent orders to consequences designed to change institutional behavior.

Like TD Bank's multibillion-dollar penalty, several other financial institutions have also come under the radar. For instance, Fenergo also found that financial institutions worldwide saw a 31% increase in the value of fines. The first half of 2024 saw 80 fines imposed with a value of over $263 million.

The financial impact is one facet of the problem. With such hits, customers stop trusting your institutions, and insurance companies raise premiums — the effects of which are staggering.

3. Manual processes don’t work for compliance anymore

Spreadsheets and email chains weren't designed for this level of complexity.

Most institutions are trying to manage 2025 regulatory requirements with tools that barely worked in 2015. The BCBS 239 data principles offer a perfect example. These standards have been around for over a decade, yet most global banks still struggle with basic compliance because their data lives in systems that can't talk to each other.

Manual processes also affect your team's productivity during audits and regulatory exams. Your compliance teams spend a week gathering basic documents from different sources. By the time you compile everything, half the information is already outdated. And this issue gets exponentially worse when you have dozens of regulations and frameworks to comply with.

4. Third-party dependencies have increased vulnerabilities

The 2024 CrowdStrike outage was a wake-up call for compliance teams.

A single vendor's software update brought down systems across the financial sector. While trading platforms failed, core banking systems struggled to stay online. Regulators no longer accept third-party failures as justification for non-compliance.

Right now, any organization depends on dozens of services to function. For example, cloud computing, fintech partnerships, and data analytics tools. That’s one of the reasons why standard setters like the Basel Committee are making you accountable for your entire vendor ecosystem.

5. Organizations are struggling with resource constraints

Every compliance team faces the same impossible equation: Do more with less while regulatory expectations keep rising.

The talent shortage in financial services compliance has reached crisis levels. Qualified professionals who understand multiple regulatory requirements are commanding premium salaries. Smaller institutions can't compete with the big banks for top talent. Even major institutions struggle to find experienced compliance managers.

Training existing staff takes time you don't have. Regulatory requirements change faster than training programs can be developed. By the time your team completes training on new requirements, those requirements have already evolved.

So, you need additional support to make sure you’re staying ahead of all these requirements.

Core elements of a financial compliance program

Building effective compliance is about creating capabilities that can adapt to whatever regulators throw at you while keeping your team sane and your institution profitable. Here are a few elements you need to account for to stay compliant:

• Governance and oversight frameworks: Strong governance starts at the board level and connects individual responsibilities to institutional risk management objectives. Your board needs to understand compliance risk in business terms through regular reporting that highlights trends and emerging risks.
• Policy management and training programs: Static policies create gaps and inconsistencies that regulators love to find during examinations. Your policy framework needs to adapt automatically when regulations change and connect requirements to specific controls, training materials, and testing procedures.
• Risk assessments and control testing: Not all risks deserve equal attention, and your program should focus limited resources on areas that matter most to regulators. Continuous monitoring and automated risk scoring help you make objective decisions instead of those based on your gut feelings. Also, cross-framework integration eliminates duplicate work — your SOX controls often support operational risk management, which feeds into your AML program. So why test the same control three different ways?
• Regulatory change management: You need horizon scanning with automated alerts to help you focus on changes that affect your institution. Also, impact assessments should tell you how new regulations will affect existing policies, procedures, and controls, enabling proactive planning.
• Data management and reporting: Poor data quality undermines even the most sophisticated compliance programs because if you can't trust your data, regulators won't trust your compliance program. Data governance ensures accuracy, completeness, and accessibility of information for compliance reporting and risk management.
• Incident response and issue management: When something goes wrong, your response determines whether it becomes a minor hiccup or a major regulatory problem. You need to implement breach notification and root cause analysis procedures that include automated timelines and templates for regulatory reporting requirements.
• Third-party risk management: Your compliance program is only as strong as your weakest vendor. You'll need to make sure your due diligence processes evaluate how well a vendor supports regulatory requirements.

How AuditBoard helps financial institutions comply with confidence

We've worked with hundreds of financial institutions facing these exact challenges. Those that have improved their compliance programs stopped treating compliance as a collection of separate requirements and started building unified capabilities that connect everything.

Here’s how they do it with AuditBoard:

Use the unified risk and compliance platform to manage the program

Most compliance programs fail because they're built on fragmented systems that don't talk to each other. You manage SOX in one tool, operational risk in another, and AML monitoring in another system. When regulators ask about your integrated risk management approach, you're stuck trying to piece together information from multiple sources.

AuditBoard changes that equation entirely.

Our platform integrates SOX, operational risk, regulatory, and IT compliance in one integrated system designed specifically for financial institutions. And automated evidence collection means you're never scrambling during regulatory examinations.

You can also use smart workflow routing to assign tasks based on risk levels and regulatory expertise. Your senior compliance officers don't need to review every routine control test, but they automatically get involved when high-risk issues arise.

The best part is that you manage your entire regulatory inventory within AuditBoard. All your alerts, reports, and controls are in one place. As a result, the documentation regulators want is already there, organized, and accessible. Your team can focus on explaining your risk management approach instead of hunting for paperwork. Adam Russell, Senior Internal Auditor, Elevations Credit Union, says:

Report on the most relevant metrics using real-time analytics

When regulators show up for examinations, they want to see evidence of ongoing compliance, not just current status. They want to understand your risk management processes, review your control testing, and evaluate your remediation efforts.

AuditBoard makes regulatory examinations less stressful for everyone involved.

The platform offers customizable dashboards that provide different views for:

• Regulatory authorities
• Board members/executives
• Compliance and risk managers

Also, automated notification and reporting reduces the manual effort required to compile required reports while making sure everything's accurate. Irrespective of how many frameworks you need to manage, everything's always available in one place. David Harrison at ORIGIN BANCORP says:

It’s time to stay 5 steps ahead of regulatory risk in 2025

Recent changes in the financial regulatory environment indicate that the space has fundamentally changed. The financial institutions positioning themselves for success in 2025 understand this reality. They're not just trying to avoid the next TD Bank scenario. They're building compliance programs that turn regulatory requirements into competitive advantages.

These organizations have stopped treating compliance as disconnected requirements managed through manual processes. Instead, they've built unified capabilities that connect everything and automate routine work.

That's exactly what AuditBoard enables.

If you’re ready to improve your financial services compliance program, book a demo with us today.

About the authors

Natalie Dytrych is a Senior Product Marketing Manager for Regulatory Compliance at AuditBoard. She has 8 years of experience helping financial institutions navigate complex regulatory compliance and risk challenges, most recently as a Senior Manager at PwC.