Is deregulation an illusion?
Federal enforcement may be slowing, but for CFOs, compliance risk is accelerating — just across 50 different jurisdictions.
Federal enforcement may be slowing, but for CFOs, compliance risk is accelerating — just across 50 different jurisdictions.
A sharp decline in federal enforcement is redrawing the compliance map for U.S. financial services firms — and it’s leaving CFOs exposed.
New data from Wolters Kluwer’s latest Regulatory Violations Intelligence Index shows that federal regulatory enforcement against financial services firms dropped by a staggering 37% in the first half of 2025.
The value of monetary penalties issued by federal agencies fell nearly a third during the same period.
The declines are especially steep in competition-related offences. Penalty values in this category fell by an extraordinary 97%, while the volume of related enforcement actions halved.
Chuck Ross, VP and Segment Leader at Wolters Kluwer Financial & Corporate Compliance, describes the shift as nothing short of dramatic.
“While deregulation was anticipated under the new administration, the velocity and magnitude of this enforcement pullback exceeds even the most aggressive predictions,” Ross says.
Yet the vacuum created at the federal level is already being filled. “Financial institutions face a greater patchwork of state-level enforcement that could be even more complex and burdensome than the federal framework it’s replacing,” he warns.
The findings come amid a sweeping deregulatory initiative by the Trump administration, including a “10-to-1” rule that mandates the repeal of ten existing regulations for every new one implemented.
That directive has coincided with substantial restructuring and budget reallocations across federal agencies — and a 67-document rollback by the Consumer Financial Protection Bureau (CFPB).
Together, these developments are reshaping enforcement dynamics. For finance leaders, the compliance landscape is no longer just a matter of adjusting to lighter federal oversight; it’s about adapting to a decentralised system of enforcement that varies dramatically by jurisdiction.
Elaine Duffus, Senior Specialised Consultant at Wolters Kluwer FCC, says state-level activity is not just rising—it’s expanding into new areas.
“We’re seeing state regulatory activity surge, particularly in areas where federal agencies have scaled back rules, guidance, or enforcement,” she notes. “This uptick is also driven by evolving consumer protection priorities.”
Wolters Kluwer’s Index tracks several key violation categories. In H1 2025, these categories saw notable drops:
These figures underscore the systemic nature of the pullback. “This isn’t just a modest adjustment—it’s a complete recalibration of the enforcement ecosystem,” Ross says.
For CFOs at multi-jurisdictional firms, the implications are immediate. The shift from centralised federal enforcement to a fragmented state-led approach introduces significant operational complexity.
“Organizations that previously dealt with a single set of federal requirements now face potentially 50 different enforcement regimes,” Ross notes. Each state brings its own processes, expectations, and risk thresholds — which could complicate everything from audit readiness to penalty forecasting.
That means traditional, centralised compliance strategies are no longer sufficient. Finance leaders must now coordinate across legal, risk, and regulatory affairs teams to ensure agility and visibility in navigating this new enforcement model.
Duffus emphasises the need for faster internal adaptation. “For organisations operating across multiple jurisdictions, regulatory change management systems must be more agile and robust than ever,” she says.
While the current deregulatory climate may seem favourable to some, Ross cautions against complacency.
“History shows us that enforcement pendulums swing,” he says. “Organizations that maintain robust compliance frameworks during periods of light federal enforcement while adapting to the emerging state-level requirements are best positioned to weather future shifts.”
For CFOs, the message is clear: compliance is no longer just a legal or operational matter. It’s a strategic, board-level priority—and increasingly a source of investor scrutiny.
In an era where regulatory risk is fragmented and fast-moving, those who can benchmark, anticipate, and act will hold the advantage.