When AI systems capable of assessing identity, transaction patterns and behavioural signals during interactions are considered, then the enablement of faster onboarding and more effective approaches to financial crime prevention could become a reality.
However, new regulations under consideration in the EU, UK and US in 2026 designed to emphasise the explainability, human oversight and – thus – transparency of underlying AI models could mean investment banks are prevented from taking the human element of AML and KYC monitoring out of the loop entirely. For example, the EU AI Act – which is set to go-live in August 2026 – along with the US Colorado AI Act – set for enactment in February 2026 within the state – could mean firms are mandated to ensure that AI models are ethical and free from unfair bias. As a result, human validation would become mandatory for many decision points, ensuring that AI enhances risk assessment rather than replacing human judgement.
Learn more about the AI Act here
Learn more about the US Colorado AI Act here
Global regulations are also broadening the scope of due diligence expectations. With the growing influence of the new EU AML Authority, a stronger push toward harmonised EU standards are expected throughout 2026. At the same time, AI governance requirements are becoming embedded into due diligence frameworks, compelling institutions to demonstrate not only compliance but also ethical and transparent use of automated systems. Traditional financial due diligence is expanding to include ESG considerations, supply-chain integrity, cybersecurity and non-financial misconduct, transforming it into a more strategic, sector-wide assessment of risk.
Learn more about the EU AML Authority here
While these regulatory proposals present new opportunities for the financial services industry to utilise new technology to develop standardised KYC requirements for international corporations, thus reducing current requirements for duplicative reporting across a multitude of regulatory jurisdictions, the mandates could also incentivise additional spending on systems designed to ensure business-as-usual compliance over the short-term.
How RegTech can support compliance in the AI era
RegTech will play an essential role in supporting compliance functions as regulations continue to evolve.