The New Rules Are Here. Here’s What Financial Services Compliance Teams Must Know (and Do) Before Falling Behind.
The AI Reckoning Has Arrived
Let’s be blunt: AI isn’t some far-off future tech or hypothetical compliance headache. It’s already woven into the DNA of financial services. From automated KYC checks to behavioural analytics, AI is powering decisions, streamlining workflows, and quietly reshaping how risk is understood and managed.
And now, Europe has drawn its line in the sand.
On 2nd February 2025, the first legally binding obligations of the EU Artificial Intelligence Act (AI Act) came into effect. It marks a seismic regulatory shift, especially for compliance professionals in the financial services sector.1
This isn’t about whether AI is coming. It’s about how you’ll adapt.
Because here’s the kicker: AI won’t replace compliance professionals. But those who fail to understand and embrace its responsible use may quickly find themselves outpaced by more agile, tech-forward firms.
What Just Happened? The EU AI Act Comes to Life and Hits Finance – Why it matters
The EU AI Act introduces a risk-based framework for regulating artificial intelligence, classifying systems by the level of risk they pose to individuals and society. As of February 2025, AI systems that fall into the “unacceptable risk” category, such as emotion recognition in the workplace, social scoring, and real-time biometric surveillance, are now outright prohibited2.
“The use of AI must not infringe on fundamental rights. Certain use cases are no longer a compliance grey area – they’re red lines.”3
These aren’t theoretical changes. Financial services firms, especially those already using AI for onboarding, fraud detection, credit scoring, and decision automation, must now evaluate how those tools align with the new classifications.
And the compliance bar is high. High-risk systems must meet stringent requirements, including implementing robust quality and risk management systems, conducting conformity assessments, ensuring human oversight, and documenting it all in detail. It’s no longer enough to say your AI tools work, you must prove they’re safe, ethical, and lawful.
UK firms might wonder if they’re off the hook post-Brexit. Not quite. While the UK’s regulatory approach to AI is more flexible and principle-based, any firm offering services that impact EU individuals falls under the scope of the EU AI Act. That means extraterritorial compliance obligations still apply.4
If your AI systems affect individuals within the EU, you’re still in scope—even post-Brexit.
What’s more, with UK regulators like the FCA and Bank of England actively exploring AI risks through discussion papers, it’s clear that governance, transparency, and accountability are becoming universal expectations.5
In short, this is a moment of reckoning for financial services. AI is now fully in the compliance spotlight, and the sector must respond accordingly.
AI Isn’t Coming for Your Job – But It Will Change It
Now let’s speak of the elephant in the room. The fear is understandable. AI can seem like a black box, and the idea that it might automate away human judgment is a daunting prospect for any professional. But in compliance, your human oversight is exactly what will make AI usable, legal, and ethical.
What’s changing isn’t the value of compliance professionals, it’s their role. Professionals who once focused on policy writing or monitoring now need to interpret algorithmic decisions, manage data ethics, and ensure AI outputs are trustworthy and explainable. These aren’t tasks to be afraid of, they’re leadership opportunities.
Compliance officers are becoming digital risk leaders. The AI Act isn’t a threat. It’s a roadmap.
The shift is already underway in the UK too, where the FCA and Bank of England have published discussion papers exploring how AI will reshape the regulatory landscape. The message is the same: human oversight is key.4
From Risk to Strategy: Taking Action on AI Compliance
With these changes in motion, the question isn’t whether compliance teams will be involved in AI governance; it’s how they’ll take the lead. This moment calls for a strategic shift. Compliance must move from reactive obligation to proactive advantage.
Firms that succeed will treat compliance not just as a shield against penalties, but as a foundation for trust, growth, and innovation. That begins with understanding your AI landscape. What tools are in place? Who owns the risk? How are decisions made and documented? These questions should be at the top of every compliance agenda.
Taking action now means conducting an internal audit of AI use cases, establishing cross-functional governance frameworks, and training staff to understand AI’s regulatory and ethical dimensions. Technology is part of the solution, but so is mindset. Teams that embrace AI literacy, critical thinking, and collaborative oversight will be positioned to lead in a highly regulated, AI-driven future.
And the right RegTech partner makes that shift easier. Platforms like Leo enable compliance teams to integrate AI into their workflows safely and efficiently, automating where it makes sense, without losing control.
Compliance isn’t just keeping up anymore, it’s setting the pace. Upskilling your team and upgrading your tech stack isn’t just smart, it’s essential.
How Leo RegTech Helps You Stay Ahead
Turning compliance strategy into reality requires more than good intentions; it demands the right tools. That’s where Leo RegTech comes in.
Built by compliance professionals for the financial services sector, Leo is designed to bridge the gap between regulation and execution. It replaces spreadsheets and disconnected systems with a unified, configurable platform that manages approvals, reporting, policies, and training, all in one place.
Leo also integrates seamlessly with third-party systems, from background checks to ID verification, acting as both a control centre and a catalyst for efficiency.
But what truly sets Leo apart is how it leverages AI in ways that enhance -not replace- human judgment. Eva AI is an intelligent assistant that helps users navigate complex regulatory requirements and the platform itself with clarity and ease. No jargon. No confusion. Just actionable support.
We’re also rolling out beta features that take automation even further, drafting UK compliance policies, analysing regulatory documents, and embedding AI directly into the workflows that matter most.
Leo isn’t just built to keep pace with regulation. It’s built to help you lead it.
Final Words…Don’t Let Fear Be the Strategy
The EU AI Act is just the beginning. But its message is clear: AI is powerful, and with that power comes responsibility.
For compliance professionals, this is a defining moment. The leaders will be those who embrace AI, not blindly, but wisely. Those who use it to enhance oversight, increase efficiency, and build trust.
Are we leading the AI shift in compliance? Or watching it pass us by?
At Leo, we believe that the right RegTech makes all the difference. Let’s shape the future of compliance together.
Want to see how Leo RegTech can future-proof your compliance team? Get in touch. Because staying compliant shouldn’t mean staying behind.
- Deloitte Executive Summary: The AI Act @ February 2025 / https://www.deloitte.com/de/de/issues/innovation-ai/european-ai-act.html ↩︎
- Same as 1 ↩︎
- European Commission: Final Text of the AI Act (2024) ↩︎
- UK Government AI Regulation White Paper ↩︎
- FCA & Bank of England AI Discussion Paper ↩︎
