{"id":11621,"date":"2026-03-05T11:50:30","date_gmt":"2026-03-05T11:50:30","guid":{"rendered":"https:\/\/fintech.global\/regtech100\/?p=11621"},"modified":"2026-03-05T11:51:12","modified_gmt":"2026-03-05T11:51:12","slug":"how-ai-is-transforming-the-role-of-compliance-in-2026","status":"publish","type":"post","link":"https:\/\/fintech.global\/regtech100\/how-ai-is-transforming-the-role-of-compliance-in-2026\/","title":{"rendered":"How AI is transforming the role of compliance in 2026"},"content":{"rendered":"

Since late 2022, the rise of artificial intelligence (AI) and its role on operational practices have evolved at a breakneck pace. In the area of compliance, this is no different, with businesses scrambling to future-proof their processes to keep up with the competition.\u00a0<\/strong>\u00a0<\/strong><\/p>\n

No longer is AI operating as a standalone control. The technology is being embedded directly into everyday workflows at a rapid pace. This brings with it a wide range of risks. For Vall Herard, CEO and co-founder of\u00a0Saifr<\/a>, this shift fundamentally changes the risk profile.<\/p>\n

\u201cWhen AI is embedded directly into workflows, a single error can scale much faster than human oversight can see it,\u201d said Herard. Herard points to three key risks that surround this, with the firm one being that cascading failures can happen much more quickly, especially in systems where you have multiple models working as multiple agents.<\/p>\n

Herard explained, \u201cA single hallucination or a single flaw in the logic in one part of the system can get propagated down to other subsystems and basically poison the decision making of all the downstream systems from there. Consequently, I think that a lot of the work at the implementation stage around understanding the limitations of the model, understanding the use cases which lend themselves to higher rates of hallucination, are key areas we focus on in doing implementation with clients.\u201d<\/p>\n

Another risk raised by Herard was that of the \u2018confused deputy\u2019 problem, which is essentially the idea that if you have a system prone to hallucination and being tricked to give a specific set of answers on a consistent basis, this is something that is subject to systemic failures and needs to be tested for.<\/p>\n

The final risk suggested by Herard was long-term memory corruption or memory poisoning.<\/p>\n

Herard explained, \u201cThe fact is, a lot of these agent-based systems have long-term information, so the extent to which the bad information is retained within the memory of the agent, this may lead to outcomes where people choose an agent without doing the proper validation and checking on a consistent and repeated basis. So, a model risk management framework should be in place to mitigate these risks.<\/p>\n

How AI alerts change compliance<\/strong><\/p>\n

Real-time AI alerts are changing the way compliance issues are identified and addressed.For Herard, the real shift is cultural as much as technical.<\/p>\n

\u201cReal-time alerts, when paired with an efficient workflow system, fundamentally change the nature of the work,\u201d he says. Compliance moves from reactive investigation \u2014 hunting for information, chasing status updates \u2014 to proactive resolution. Issues are surfaced immediately. Decisions are made faster and friction drops.<\/p>\n

The difference, he argues, is alignment. In traditional compliance environments, progress often depends on scheduled check-ins: status meetings designed simply to ensure everyone is looking at the same information. Those meetings introduce delay. They create latency in decision-making. Real-time AI alerts, by contrast, generate what Herard describes as \u201chyper-transparency.\u201d Every stakeholder sees the same update at the same moment. The result is asynchronous alignment. Instead of convening meetings to establish basic facts, teams manage by exception.<\/p>\n

\u201cIf the AI is working the way it is supposed to, you\u2019re getting all the real time alerts, the hyper transparency, that make the organisation overall more efficient,\u201d said Herard. Roughly 95% of the issues move through the workflow without the need for collective debate, and alerts flag what needs mitigation. Relevant stakeholders review the same information, agreement is reached quickly, with the remaining 5% requiring escalation and discussion.<\/p>\n

This, for Herard, is where a lot of the value realisation in the ROI comes in. Clients using Saifr in marketing communications compliance, for example, report fewer status meetings, shorter review cycles and more focused interactions between business and compliance teams.<\/p>\n

He said, \u201cI think this all ties back to the initial premise of us building Saifr, which is to explore how we remove inefficiency and friction so that we can make these processes more transparent and faster and get to the decision more quickly.\u201d<\/p>\n

Why AI risk has become a board-level issue<\/strong><\/p>\n

Over the last couple of years, AI risk has become a board-level issue, rather than a purely technical or operational one. What is the reason for this?<\/p>\n

\u201cAs we move into 2026, and we certainly saw this through 2025, AI has gone from being a CIO-led technical project to a permanent board-level imperative,\u201d he says. What was once treated as an experimental add-on is now embedded in core workflows. AI is no longer \u201ca plug-in thing that\u2019s off to the side.\u201d It is becoming a driver of competitive survival.<\/p>\n

Put simply, Herard believes firms that embed AI into how they operate will outpace those that do not. The efficiency metrics already bear that out. But with that advantage comes responsibility, and that responsibility cannot sit solely with the technology function.<\/p>\n

Boards carry fiduciary duties of oversight. And when AI systems influence business outcomes, that duty extends to how those systems are governed. \u201cA company cannot simply say, \u2018the AI hallucinated\u2019 and that resulted in a bad outcome,\u201d Herard notes. Liability does not evaporate because a machine produced the error. In certain circumstances, directors themselves can face exposure for failures of oversight\u2014 a question tied directly to the business judgment rule.<\/p>\n

The reality arising from this is that sharper boardroom conversations are being had. Herard cited taking part in a panel at a mutual fund board members\u2019 association, where AI governance was top of mind for those involves. Across the wider sector, directors are asking how they should interpret their responsibilities, not just in theory, but operationally.<\/p>\n

Multiple forces are converging at the same time. For example, hallucinations and model failures are proving to be governance issues, not merely technical glitches. Second is accountability. Herard cited a previous MIT study that found roughly 300 companies spent a combined $40bn on AI initiatives in a single year. The key questions Herard asks are how many of these instances exhibited a positive ROI, and whether the companies\u2019 boards actually oversaw and overlooked all of that.<\/p>\n

A third area is reputational integrity. As with ESG before it, AI is generating its own version of \u2018AI washing\u2019, claims Herard, where companies are overstating or mischaracterising their capabilities. \u201cThe extent to which every company is now an AI company,\u201d Herard says, means AI risk is enterprise risk. And enterprise risk lives at board level.<\/p>\n

Operational conversations with CIOs and CTOs continue. But increasingly, Herard finds that directors themselves are engaging directly \u2014 asking how to ensure that the AI, in his words, is \u201csafer to our board.\u201d<\/p>\n

Bullet-proofing AI-driven compliance<\/strong><\/p>\n

The million-dollar question for many across a wide range of sectors right now is how do organisations ensure AI-driven compliance tools are transparent, explainable and defensible to regulators?<\/p>\n

For Herard, accountability has shifted from high-level policy statements about how the industry thinks about AI, to something far more concrete: having verifiable, data-driven governance documents. People, he claims, want to understand how many false positives are being generated, the true positive rate of a system, and how often checks are being made to ensure there is no drift occurring.<\/p>\n

These are operational metrics, not philosophical commitments. And they form the backbone of defensibility. But numbers alone are not enough. \u201cThere\u2019s the narrative explanation versus the quantitative reporting,\u201d Herard notes. Trust requires both. Data demonstrates control; explanation makes that control intelligible.<\/p>\n

In practice, firms are pursuing several approaches. One is traditional explainable AI, techniques that attempt to translate mathematical model weights into human-understandable reasoning. Herard gives the example of identifying which input variables carried the greatest influence in a given decision. Firms may generate feature-importance rankings or visual heat maps to illustrate which factors mattered most.<\/p>\n

The challenge, Herard observes, is accessibility. \u201cIt can be very abstract, and sometimes it\u2019s hard for a non-technical person to really grasp and understand what some of the factors are.\u201d For non-technical stakeholders, particularly at the board level, a heat map of weighted variables doesn\u2019t always translate into genuine understanding. The problem can become even more complex when models rely on latent variables that have no observable meaning.<\/p>\n

Another approach gaining traction, Herard states, is counterfactual explanation. Instead of asking why the model reached a decision in purely statistical terms, the system Is prompted to answer a more practical question surrounding what would have needed to change for the outcome to be different.<\/p>\n

A third technique involves breaking complex models into local, interpretable steps, said Herard, effectively decomposing a sophisticated system into a sequence a human can follow from point A to point B. The aim is traceability, with the ability to walk through the chain of reasoning and see how a specific conclusion was reached.<\/p>\n

\u201cIt\u2019s really about having some transparency into the inner workings so that at the board level, they can explain it in a natural way instead of a technical way, making it easier to understand,\u201d said Herard.<\/p>\n

Balancing act<\/strong><\/p>\n

How can businesses balance time savings and efficiency gains with responsibility for the outcomes AI influences? Here, Herard makes clear it isn\u2019t that easy to pinpoint.<\/p>\n

He explains, \u201cIn many instances where AI has been injected, there isn\u2019t a historical benchmark to go against. It isn\u2019t as if people in the past who were looking at compliance frameworks were keeping track of how much time they were spending on a specific task. Consequently, comparing that against a model where the result is almost instant is very hard to judge on a historical basis.\u201d<\/p>\n

One of the decisions Saifr has made here to help in this conversation is to create benchmarks where it takes a set of tasks and gives it to a team of qualified individuals with different levels of experience.<\/p>\n

\u201cWe come up with a time estimate for giving a task to a model or an agent and find out what is the average time savings you can see out of this process, then embed some of that knowledge into our underlying models,\u201d said Herard. \u201cWhen you are running a Saifr model, you are provided with an estimated time-saving based on those human trials across a team of people, so that you can see the efficiency gain in the process.\u201d<\/p>\n

From here, Saifr encourages businesses to try and run that exercise internally. In the Herard\u2019s view, this is where its going to differ across firms based on the workforce that they have in place and their level of experience.<\/p>\n

Herard concluded, \u201cOnce you have this estimate of time, then you essentially get to a position where you can make an informed decision in terms of what is the real gain in time savings and efficiency, with the responsibility for it to be an explainable outcome of the AI model.\u201d<\/p>\n

Read the daily RegTech news<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Since late 2022, the rise of artificial intelligence (AI) and its role on operational practices have evolved at a breakneck pace. In the area of compliance, this is no different, with businesses scrambling to future-proof their processes to keep up with the competition.\u00a0\u00a0 No longer is AI operating as a standalone control. The technology is […]<\/p>\n","protected":false},"author":4,"featured_media":11622,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"yoast_head":"\nHow AI is transforming the role of compliance in 2026 - RegTech100<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fintech.global\/regtech100\/how-ai-is-transforming-the-role-of-compliance-in-2026\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How AI is transforming the role of compliance in 2026 - RegTech100\" \/>\n<meta property=\"og:description\" content=\"Since late 2022, the rise of artificial intelligence (AI) and its role on operational practices have evolved at a breakneck pace. In the area of compliance, this is no different, with businesses scrambling to future-proof their processes to keep up with the competition.\u00a0\u00a0 No longer is AI operating as a standalone control. 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