CCI staff share recent surveys, reports and analysis on risk, compliance, governance, infosec and leadership issues. Share details of your survey with us: editor@corporatecomplianceinsights.com.
Violation volumes drop; total fines rise
US financial regulators pursued fewer but substantially higher-value enforcement actions in late 2024, with total penalties jumping 83% to $5.4 billion despite a 35% decrease in violation volumes, according to new analysis from Wolters Kluwer Compliance Solutions that comes as the Trump Administration rapidly accelerates financial deregulation efforts.
The semi-annual review of US financial services sector enforcement found that regulators issued 145 violations in the second half of 2024, down from 223 in the first half of the year.
“While violation volumes dropped to levels similar to 2022-2023, the sharp increase in penalty amounts signals a focused approach on high-impact enforcement that could carry implications even in a deregulatory environment,” noted Elaine Duffus, senior regulatory analyst at Wolters Kluwer Compliance Solutions.
The findings take on added significance as the administration pursues reforms to streamline (or eliminate) enforcement by federal agencies like the SEC and the CFPB, with priorities shifting toward high-profile fraud cases rather than broad regulatory oversight.
Other key findings:
- Financial violations saw the most dramatic shifts, with actions decreasing 56% from 137 to 60, while penalty amounts more than doubled with a 125% increase.
- The largest single action was a DOJ enforcement action against a top 10 US bank for about $3 billion related to Bank Secrecy Act and money laundering violations.
- Consumer protection-related violations remained relatively stable with 77 actions in H2 2024 compared to 83 in the first half but saw a substantial 93% increase in penalty amounts.
- Competition-related violations increased from three actions to eight, while penalties declined 20% to $632 million.
Wolters Kluwer’s Regulatory Violations Intelligence Index analyzes enforcement actions of interest to commercial banks, broker-dealers and other financial services firms. The report suggests that while the directional trends limit the use of historical data as guideposts to future supervisory priorities, the first half of 2025 will provide valuable insights into how these policy changes are impacting the regulatory enforcement landscape.
AI governance gaps emerge as 35% of executives use unauthorized tools
AI governance is falling short at many organizations, with more than a third (35%) of business leaders admitting they would use AI tools even without authorization, according to new research from Globalization Partners, which surveyed 2,850 executives across five countries and 500 US HR professionals. The global study of senior leaders reveals that while 92% of organizations require approval to implement new AI products, many executives are circumventing these policies to boost productivity.
Although executives are eager to utilize AI in daily operations, they remain cautious about its role in high-stakes decisions, the survey found. Only 3% would trust AI to make any decision without human oversight, and more than half (51%) specifically would not trust AI for financial investment or budgeting decisions, suggesting lingering concerns about AI reliability in critical areas.
Most organizations (77%) have implemented formal training programs on AI, but unauthorized tool usage continues to create security risks, data privacy concerns and workflow inconsistencies. This shadow AI usage is driven primarily by employees seeking increased productivity or advanced capabilities not offered by company-approved solutions.
Other key findings:
- 91% of global executives are actively scaling up their AI initiatives.
- HR departments increasingly view automating legal compliance requirements as one of the greatest opportunities for AI-driven productivity.
- 95% of executives believe AI tools like ChatGPT and Google Gemini are more effective than traditional search engines for information retrieval.
- 67% of executives would prioritize using AI to increase productivity by 50%, even if it meant reducing headcount.
“AI is no longer just an experimental technology. It’s become a strategic pillar for companies looking to stay competitive,” said Nat Natarajan, chief product and strategy officer at G-P, a global employment company. “However, to address concerns about privacy and bias, organizations must prioritize the accuracy of inputs along with human oversight to ensure that AI is not only powerful but also reliable and responsible.”
1 in 3 directors cite CEO succession planning as top 2025 priority
CEO succession planning has emerged as a top board priority for 2025, with 34% of public company directors citing it as their critical focus, outranking concerns including AI adoption (27%) and geopolitical risk (10%), according research from Diligent, Corporate Board Member and FTI Consulting.
The What Directors Think survey, conducted before the 2024 presidential election and which covered more than 200 US public company directors, reveals growing anxiety about leadership transitions following a spike in CEO departures. Nearly 70% of directors said a sudden departure of a CEO or key executive would have significant consequences on their company’s strategy.
“Succession planning is rising up the ranks as a board priority for 2025,” said Dottie Schindlinger, executive director at Diligent Institute. “Though it should always be top-of-mind in the boardroom, succession planning is a growing priority right now because steady and focused leadership is essential for companies to execute on their growth strategies.”
The importance of succession planning has increased dramatically, with the number of directors finding it challenging to oversee more than doubling compared to 2024. It now ranks second only to strategy (42%) on the list of issues directors find most challenging today, selected by 30% of respondents.
Despite this concern, most boards appear inadequately prepared. Only 21% of directors rated their board’s effectiveness on CEO succession planning as “excellent,” while 17% admitted their current succession process was “poor” – a higher percentage than for any other dimension of board service evaluated.
Other key findings:
- 76% of directors are prioritizing growth opportunities in 2025, a sharp turnaround from previous years’ focus on cost-cutting measures.
- 61% of directors believe a major cybersecurity incident would have significant consequences on their company’s strategy.
- 80% of directors report their companies have taken some action on AI adoption, though approaches vary widely by sector.
- 82% of directors believe boards should not encourage C-suite leaders to speak publicly on controversial issues.
