Day: February 24, 2025

Last week, I looked at five things a Chief Compliance Officer (CCO) or compliance professional could do at little or no cost to ‘Up Their (Compliance) Game.’ I want to continue this theme this week but want to tackle it differently. I will look at five innovations for compliance professionals around Artificial Intelligence (AI). AI has moved from an emerging trend to a fundamental component of modern corporate compliance programs. Today, we begin with the use of AI for ongoing monitoring.

In 2025, organizations will no longer experiment with AI-driven compliance tools but will embed them into daily operations to monitor transactions, detect anomalies, and flag potential violations in real-time. The shift has been driven by increasing regulatory scrutiny, growing data complexity, and recognizing that traditional compliance methods, such as manual audits and periodic risk assessments, are no longer sufficient to address today’s evolving threats.

One of the most significant innovations in AI-powered compliance is using machine learning algorithms to analyze vast amounts of financial, transactional, and communications data. These tools can detect patterns of misconduct that would be nearly impossible for human reviewers to identify. AI-driven systems are particularly effective in identifying red flags associated with bribery, fraud, money laundering, and insider trading. For example, financial institutions such as JPMorgan Chase have implemented AI-based surveillance systems that analyze trader communications and transaction records to detect potential misconduct before it escalates.

Beyond monitoring, AI is transforming how organizations conduct internal investigations. Generative AI tools can now analyze employee emails, chat logs, and phone transcripts to identify risk-related language and patterns of unethical behavior. These tools can generate initial investigative reports, summarize key findings, and suggest next steps for compliance teams, significantly reducing the time and effort required to conduct in-depth inquiries. This capability is particularly valuable in responding to whistleblower complaints, as it enables companies to quickly assess a report’s credibility and determine whether further action is needed.

From a regulatory perspective, enforcement agencies are also embracing AI and, in turn, expecting corporations to do the same. No matter what might happen to the Department of Justice (DOJ) 2024 Evaluation of Corporate Compliance Programs (ECCP), this document clarified the importance of data-driven compliance monitoring. The bottom line is that regulators worldwide now expect companies to leverage advanced analytics and AI-driven tools to proactively identify misconduct rather than relying solely on traditional audit-based detection methods.

Lessons for Compliance Professionals

1. AI is a Compliance Enabler, not a Replacement for Human Oversight. While AI can significantly enhance risk detection and investigative efficiency, it is not a substitute for experienced compliance professionals. Organizations must implement AI with human oversight and contextual analysis to assess and address flagged risks properly.
2. Regulators Expect AI-Driven Compliance, and Ignorance is No Longer an Excuse. No matter what the Trump Administration would do to eviscerate the FCPA, the DOJ, and other enforcement agencies increasingly view AI-based monitoring as a best practice. Companies that fail to invest in these tools may be disadvantaged in regulatory investigations.
3. Data Integrity and Bias Mitigation are Critical. AI models are only as effective as the data they are trained on. Compliance teams must ensure that their AI systems are not reinforcing biases or producing false positives that could lead to unnecessary investigations or missed risks.
4. AI Can Improve Whistleblower Response Times and Investigations. Organizations that integrate AI into their whistleblower response programs can triage reports faster, prioritize high-risk cases, and ensure whistleblowers receive timely feedback, which aligns with the DOJ’s increased focus on whistleblower protections.
5. Early Adoption Provides a Competitive and Ethical Advantage. Companies that invest in AI-driven compliance now will be better positioned to mitigate risks, meet regulatory expectations, and demonstrate a commitment to ethical business practices. Early adopters will also benefit from cost savings in reducing manual compliance efforts and avoiding costly enforcement actions.

The Future is Here

These lessons are not pie-in-the-sky prognostications but are based on real-world examples of how AI is used in business operations today.

1. Citi’s AI-Powered Risk Analytics in Anti-Money Laundering (AML) Compliance. Citi has integrated predictive analytics and AI-driven risk assessment models into its AML compliance efforts. Citi’s system can identify potential money laundering activities by analyzing customer transaction histories, social connections, and geographic risk factors before they escalate. These predictive models help compliance officers prioritize high-risk cases and focus on investigating the most likely sources of financial crime. The result is a more efficient and effective AML compliance program, reducing false positives and improving regulatory compliance.
2. Walmart’s Predictive Supply Chain Risk Management. Walmart uses predictive analytics to identify compliance risks within its global supply chain. By analyzing supplier performance data, shipment delays, and external risk factors such as weather disruptions, political instability, and labor violations, Walmart can proactively mitigate risks that could lead to regulatory violations or reputational damage. For example, the company can detect early warning signs of forced labor risks or environmental non-compliance and take corrective action before an issue triggers an investigation.
3. Lockheed Martin’s Predictive Cyber Risk Modeling. Lockheed Martin has developed a predictive analytics framework for cybersecurity compliance. The company’s system uses machine learning algorithms to assess network traffic, employee behaviors, and external threat intelligence sources to predict potential cyberattacks before they occur. This predictive approach enables compliance teams to implement targeted security measures, ensuring compliance with strict defense industry regulations such as NIST 800-171 and the Cybersecurity Maturity Model Certification (CMMC).
4. Pfizer’s Predictive Analytics for Drug Compliance and Pharmacovigilance uses predictive analytics to ensure regulatory compliance in drug development and distribution. The company’s models analyze clinical trial data, patient feedback, and adverse event reports to predict potential medication safety issues before regulatory agencies intervene. This proactive approach helps Pfizer stay ahead of FDA compliance requirements, minimize risks of drug recalls, and protect patient safety.
5. Uber’s Predictive Risk Model for Regulatory Compliance has implemented predictive risk assessment models to monitor driver compliance with safety and licensing regulations across different jurisdictions. By analyzing driver behavior, customer complaints, and local regulatory trends, Uber can predict which regions will likely impose stricter regulations or where driver misconduct risks may increase. This allows the company to proactively adjust its compliance strategy, update policies, and strengthen enforcement measures before facing regulatory penalties.
6. General Electric’s Predictive Compliance for Industrial Safety. GE has integrated predictive maintenance and compliance analytics into its industrial equipment operations. GE can predict when equipment failures or safety violations might occur by analyzing sensor data from turbines, jet engines, and manufacturing plants. This ensures regulatory compliance with occupational safety and environmental laws, reducing workplace accidents and avoiding hefty regulatory fines.

Predictive Compliance is a Game-Changer

The bottom line is that these examples demonstrate that predictive analytics is not just a theoretical concept; it is actively transforming compliance programs across industries. From financial institutions and global supply chains to healthcare, cybersecurity, and industrial safety, businesses use AI-powered insights to anticipate compliance risks and take proactive action.

The era of AI-powered compliance has arrived, and organizations that fail to embrace it risk being left behind. By leveraging AI-driven monitoring, predictive analytics, and investigative tools, compliance teams can enhance their ability to detect and prevent misconduct, streamline investigations, and strengthen their overall compliance posture. As regulators continue to raise expectations, companies must view AI not as a futuristic concept but as an essential component of a modern, proactive compliance regime.