As 2024 comes to a close, compliance teams across the country are looking towards 2025 and determining what to prioritize and how to mature their programs to meet evolving risks. With complex supply chains, evolving regulations, and growing workforces, determining what steps to take can seem daunting. This blog explores areas to consider when planning your year ahead.
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Keeping Tabs on Global Compliance Regulations
While enforcement actions within the United States go through a period of transition with any new Administration, compliance teams in the US must remain vigilant about global regulations to ensure their organizations stay cooperative, even if they primarily operate domestically. This is particularly important due to the increasing interconnectedness of global markets and the global reach of many international regulations.
The Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD) are examples of this; while these are EU directives, they have far-reaching implications for non-EU companies operating within the EU market.
For instance, the CSDDD applies to companies based outside the EU if they do significant business in the EU, requiring them to identify, prevent, and mitigate negative human rights and environmental impacts within their operations and value chain. Similarly, the CSRD mandates sustainability reporting for large non-EU companies operating in the EU market, with specific requirements for environmental, social, and governance (ESG) disclosures.
Beyond Environmental Regulations
The UK Bribery Act and the EU AI Act further underscore the importance of global regulatory awareness for US compliance teams. The UK Bribery Act has extraterritorial jurisdiction, allowing for the prosecution of offenses committed abroad by persons with a "close connection" to the UK. This means US companies with UK operations or connections could potentially face prosecution under this act.
The EU AI Act, while still in development, sets forth requirements for high-risk AI systems, including those developed or used outside the EU but deployed within it. As AI becomes increasingly integral to business operations, US companies developing or using AI systems that may be deployed in the EU need to ensure compliance with these emerging regulations to avoid potential legal and reputational risks.
White Collar Enforcement During the Trump Administration
White collar enforcement is expected to increase during the second Trump administration, particularly in areas such as the Foreign Corrupt Practices Act (FCPA) and sanctions violations. While there may be an initial slowdown due to personnel changes and budget constraints, enforcement activities may pick up as the administration settles in. The Department of Justice (DOJ) may focus less on white collar cases at the highest levels, potentially giving prosecutors more freedom to build and charge cases. This could lead to faster case progression with fewer administrative roadblocks.
The Securities and Exchange Commission (SEC) is anticipated to return to a more traditional enforcement agenda under the new administration. This is likely to include a focus on cases involving financial reporting, misleading disclosures, fraud, Ponzi schemes, and insider trading. Despite potential changes, the SEC's Whistleblower Program is likely to remain robust due to its bipartisan support.
While enforcement in areas such as cryptocurrency and ESG may decrease, the overall trend suggests a return to more traditional white collar enforcement priorities with potentially increased activity in certain areas.
Eliminating Unethical Practices From Supply Chains
While there may be a dip in ESG-related enforcements under the new administration, US compliance teams who operate within the EU, or with EU businesses still have work to do.
Due to increasing global regulatory pressure and the potential for severe consequences, teams should still work towards identifying and eliminating modern slavery and unethical practices from their supply chains.
An example of note that will have implications outside of its immediate jurisdiction is the recently approved ban on products made with forced labor from the European Union, set to take effect in mid-2027. This ban will require companies of all sizes and sectors to conduct human rights due diligence and risk assessments on their supply chains, further emphasizing the global shift towards stricter enforcement of ethical labor practices.
Not Just About Regulatory Compliance
Beyond regulatory compliance, companies should prioritize ethical practices for the sake of doing good and upholding moral standards. By actively working to eliminate modern slavery and unethical practices, businesses contribute to creating a more equitable global economy and fostering positive social change. This commitment to ethical behavior aligns with the growing consumer demand for responsible business practices and can lead to enhanced brand reputation and customer loyalty.
Furthermore, stakeholders, particularly customers, increasingly expect companies to uphold ethical practices and are more likely to support businesses that demonstrate a commitment to social and environmental causes.
A survey conducted by Cone Communications and Ebiquity found that 87% of consumers would purchase a product because a company advocated for an issue they cared about. Additionally, 88% of consumers would purchase products that are sourced responsibly, and 83% of survey respondents would purchase products that are ethically produced.
This shift in consumer behavior highlights the importance of prioritizing ethical practices not only for compliance but also for maintaining a competitive edge in the market. By aligning corporate values with those of their target audience and prioritizing transparency, authenticity, and social responsibility, companies can cultivate lasting relationships with consumers, ultimately leading to enhanced loyalty and advocacy.
Saying Goodbye To Manual Processes and Hello to Efficiencies and Automation
As we approach 2025, compliance teams need a more sophisticated approach to risk management. The reliance on manual processes and data inputs is no longer sustainable in an environment where the volume and complexity of compliance requirements continue to grow exponentially.
Compliance teams must prioritize embracing mature compliance management solutions to effectively navigate this challenging terrain and mitigate both internal compliance challenges and external third-party risks.
Phasing out manual processes in favor of automated compliance systems is not just a matter of efficiency; it's a strategic imperative. These advanced solutions offer critical capabilities such as automated workflows, real-time monitoring, and comprehensive audit trails that are essential for maintaining regulatory compliance in 2025 and beyond.
While the transition to new technology may seem daunting, the benefits far outweigh the initial challenges. Compliance software provides the necessary tools to streamline operations, reduce human error, and allocate resources more effectively.
By leveraging AI-enabled risk intelligence and machine learning algorithms, compliance teams can process vast amounts of data with unprecedented speed and accuracy, enabling them to identify and address potential issues proactively.
Capabilities of Mature Compliance Solutions
Furthermore, mature compliance management solutions offer the transparency and reporting capabilities that are increasingly demanded by regulators, stakeholders, and internal leadership. These systems provide a centralized compliance platform for managing many factors, from third-party risk assessments to internal policy enforcement.
This holistic approach not only enhances the organization's ability to balance internal and external compliance risks but also demonstrates a commitment to robust governance.
As compliance requirements become more stringent and the consequences of non-compliance more severe, the adoption of advanced compliance technology is no longer optional. It is a fundamental requirement for compliance teams to succeed in 2025, ensuring they can adapt quickly to regulatory changes, maintain operational integrity, and protect their organization's reputation in an ever-evolving business landscape.
To learn more about how to take steps forward to compliance maturity, see our solutions in action!
Colin Campbell is Gan Integrity's Strategic Product Marketing and Analyst Relations leader with over 15 years of experience in the SaaS software and tech industry. Colin has led analyst relations and product marketing growth strategies in North America, EMEA, UK and APAC, growing revenues in multiple industries. At GAN Integrity, Colin drives market expansion, demand generation and significantly enhancing customer retention, with a talent for aligning marketing strategies with business goals to deliver results.