Critical thinking in Due Diligence- Don’t let technology think for you

For the past several years, compliance officers have been promised a technological revolution. Vendors tout AI systems that will slash false positives by 90%, automate end-to-end KYC workflows, and eliminate the manual burden that weighs down compliance teams. The pitch is compelling, deploy the right technology, and your AML challenges will be solved.

However, regulators are now warning of a different reality. The European Banking Authority’s 2025 report flags that “implementation of regtech solutions is hampered by inadequate in-house expertise, poor governance and insufficient oversight” and crucially, that poorly implemented compliance technology is “introducing risk rather than reducing it.” Financial institutions have discovered what many compliance officers suspected all along: you cannot outsource understanding.

The question we must ask is not whether technology has a role in modern compliance, it clearly does, but whether we’re allowing vendors’ promises to erode the very professional judgment that makes compliance effective.

Colin Tansley has a long career in investigations and for the past 16 years has taught and practised Due Diligence Investigations. Whilst he admits AI should not be ignored he is always keen to stress the importance of investigative skills.