AI and the Future of Regulatory Compliance

AI and the Future of Regulatory Compliance

AI is already influencing every part of advisor workflows—from marketing to analytics—and regulators are actively examining how firms use it. In 2026, the compliance question isn’t whether AI is used, but how it’s governed, supervised, and documented. Orion Compliance helps firms evidence and oversee AI usage, not just adopt it, so their compliance programs keep pace with a world where AI is now standard.

AI Governance: Challenges and Cautions for Financial Firms

The genie is out of the bottle.

Artificial intelligence (AI) is no longer an emerging technology; it’s already embedded in the financial sector. From marketing to client service and analytics, AI is driving efficiency and scalability for advisors and financial institutions. In 2026, the compliance challenge isn't about whether AI is used—it’s about how it’s governed, supervised, and documented.

Regulators are no longer just warning about AI; they are actively examining its use. The SEC, for example, focuses on AI’s potential financial risks, including AI washing, and ensuring that firms can demonstrate proper oversight. As AI becomes an integral part of financial workflows, choosing a compliance solution that not only adapts to this reality but actively governs and supervises AI usage is critical.  

AI Washing - Making False Artificial Intelligence-Related Claims

Stemming from a similar concept called greenwashing- making overstated, misleading, or false claims related to a company’s environmental efforts- the SEC is concerned that AI Washing “may run afoul of securities laws.”

Just as the SEC has continuously cracked down on greenwashing, it is actively watching for instances of companies engaged in AI Washing by providing false or misleading claims to investors about its genuine AI capabilities.

A prime example is Rockwell Capital Management LLC.  In February 2023, Rockwell and its founder agreed to settle SEC fraud charges for allegedly misrepresenting AI and machine learning models for predicting price behavior.

Importantly, Rockwell’s experience with the SEC is not an isolated anomaly. “Firms should anticipate an increase in SEC enforcement actions pertaining to alleged AI Washing. Additionally, they should prepare for increased SEC oversight concerning their use of AI and the statements made to investors about AI’s capabilities.”

How To Remain Compliant and Out of the SEC’s Crosshairs?    
   

Choosing a compliance platform that anticipates and integrates AI technologies is logically the best solution for financial entities to remain compliant. If clients only wanted someone to manage the nuts and bolts of portfolio creation and trading, they could turn to a robo-advisor. Clients who choose to work with RIAs seek a deeper interpersonal connection.

Some areas where AI may help advisory firms create a better client experience include:

• Back-office support: With AI, firms can reduce the manual work behind billing, reporting, and reconciliation, giving advisors more time to focus on clients, planning conversations, and business growth. Advisors spend 4.2 hours each week on administrative tasks — time that could be redirected toward higher-value client work.

• Compliance: can support stronger oversight by helping teams review policies, summarize regulatory alerts and guidance, and streamline time-consuming processes like employee trade monitoring. That can help firms stay more responsive while maintaining the controls clients expect.

• Client servicing: AI should not replace personal client conversations, but it can help advisors prepare for them. From summarizing notes to organizing follow-ups and identifying service needs, AI can support the behind-the-scenes work that helps clients feel known, understood, and well served.

• Marketing and sales: With the help of AI, firms can deliver more relevant, personalized communications at scale, making it easier to share timely insights, nurture prospects, and connect with clients based on their needs and interests.

• Client support and communication: AI can help clients get faster answers to common questions through automated responses or chatbot experiences. It can also help draft emails and other client communications, giving advisors a stronger starting point while keeping human judgment at the center.

Compliance solutions that anticipate AI technology should also guide companies to adopt best practices to avoid AI washing.  A compliance program that anticipates AI should result in companies considering the capabilities of the technology they employ to ensure whether it can truly be characterized as AI. Such solutions should also closely scrutinize any statements to customers regarding a company’s AI capabilities.