Regulatory complexity making effective compliance much more challenging in Ireland compared to around the world

New PwC research reveals that regulatory complexity is making effective compliance in Ireland much more challenging compared to around the world. Irish companies are falling behind their global counterparts in adopting artificial intelligence (AI) for compliance purposes. These are some of the key findings from PwC’s latest Global and Irish Compliance Survey published in Ireland today. The study, which surveyed 1,802 executives across 63 territories including 32 respondents in Ireland, reveals a pressing need for Irish businesses to transform their compliance functions to navigate an increasingly complex regulatory landscape and leverage new technologies. This press release deals with the Irish survey results.

According to the survey, key strategic initiatives requiring compliance involvement in the next three years are digital transformation (Ireland: 72%; Global: 71%) and new products and services (Ireland: 56%; Global: 49%).

The survey found that 97% of Irish respondents are of the view that their organisation’s compliance requirements have become more complex in the last three years, higher than global counterparts (85%). Regulatory complexity is the main reason making effective compliance more challenging and is much more pronounced in Ireland (Ireland: 78%; Global: 47%). Resource capacity is also fuelling compliance effectiveness’ challenges (Ireland: 53%; Global: 28%).

This complexity is having a significant impact on business operations. Nearly three-quarters (73%) of Irish respondents said that the increasing complexity of compliance requirements is stunting many key growth-related areas such as profitability, market expansion, launching new products and services, adoption of AI and resource capacity (Global: 74%).

Julie Kennedy, Risk and Regulation Partner, PwC Ireland, said: “In the current economic environment of disruption and uncertainty, having a best-in-class compliance function that ensures the business adheres with all applicable regulations, preventing financial loss and guarding the firm’s reputation, is more important than ever.

“As regulatory pressures intensify and technology reshapes compliance, Irish businesses must act decisively to close the gap with global leaders. By embracing cutting-edge technology, nurturing diverse talent and adopting a strategic mindset, firms can transform compliance from a cost centre into a value driver.

“Those who successfully reimagine their compliance functions as strategic assets will gain a competitive edge in an increasingly complex business environment. For Irish companies, swift action is crucial to avoid falling behind in the global compliance race.”

Irish firms lag global counterparts on AI adoption

While Irish firms are increasingly using technology to automate and optimise compliance activities, they lag global counterparts on AI adoption. On average, just 12% of Irish respondents said that they are either piloting or already using AI across a wide range of business areas compared to more than double that for global counterparts (29%), such as using AI in predictive analytics, fraud detection and investigations.

Despite this gap, over half (59%) of Irish respondents believe that AI will have a net positive impact on compliance, but global counterparts expect far greater benefits (71%). This presents a significant opportunity for Irish businesses to catch-up and leverage AI to enhance their compliance capabilities.

The complexity of data across the organisation (63%) and lack of technology tools (50%) are the key challenges holding up the use of data to support compliance activities (Global: 63% and 42% respectively).

At the same time, a large majority of Irish respondents are concerned about data privacy (88%) and misinformation when it comes to adopting AI in compliance activities, similar to global levels (89%).

Global firms plan to invest more in technology to optimise compliance compared to Irish counterparts

The survey reveals that less than a quarter (23%) of Irish respondents said that they are planning to invest more in technology to optimise compliance activities, behind global counterparts (34%).

The main factors influencing an organisation’s compliance investment are regulatory changes (Ireland: 63%; Global: 42%) along with the desire to enhance compliance effectiveness (Ireland: 47%; Global: 30%).

Fraud risks top priority for compliance functions

The increasingly complex environment is particularly evident in certain areas of compliance. For example, 44% of Irish respondents cited Anti-Bribery/Anti-Corruption (ABAC), Anti-Money Laundering (AML), and other fraud risks as the top priority for compliance, far ahead of global counterparts (25%). 41% of Irish respondents ranked consumer protection as the top priority, much higher than global counterparts (9%). This disparity likely reflects the publication of Ireland’s revised Consumer Protection Code. Reflecting the increasing importance of digital trust in business operations, the top priority for global counterparts is cybersecurity (Global: 37%; Ireland; 31%). Global respondents also ranked data privacy more important (Global: 34%; Ireland: 19%).

Irish companies place higher emphasis on key areas enhancing ‘culture of compliance’ than global counterparts  

The survey highlights the importance of human factors in creating a strong compliance culture. Irish companies place higher value than global counterparts on certain key elements that are important in enhancing their organisation’s ‘culture of compliance’. For example: senior management sponsorship (Ireland 78%; Global: 55%) and accountability frameworks (Ireland: 50%; Global: 29%).

Specialist knowledge is seen as a critical skill to maintain effective compliance by 81% of Irish respondents (global: 53%). Nearly six out of ten (59%) saw communication/collaboration and critical thinking/professional skepticism as critical skills (Global: 42% and 40% respectively). This emphasis on specialisation and communication/critical thinking may influence future talent acquisition and development strategies in the compliance field, especially in Ireland.

Irish companies more ambitious about improving compliance capabilities - looking to catch up

Despite current challenges, Irish companies are more ambitious about improving their compliance capabilities compared to global counterparts – and perhaps are looking to catch up. While only 9% of Irish firms currently consider themselves as leading (Global: 7%), 47% aim to be clear leaders within three years when it comes to their compliance capabilities (Global: 38%).

Julie Kennedy concluded: “Embracing the future of compliance with a strategic, innovative approach needs to be right sized to your firm. Traditional methods are no longer sustainable in the face of rapid regulatory changes, evolving risks and a continuing.”

“The survey identified a group of ‘compliance pioneers’ – about one in ten respondents who are embracing compliance transformation more aggressively. These pioneers are more likely to have broader responsibilities, offer proactive advice, get involved in strategic initiatives, and invest more in technology and AI.”

About the survey

PwC’s latest Global and Irish Compliance Survey sought the views of 1,802 executives across 63 territories including 32 respondents Ireland. The research reveals a pressing need for Irish businesses to transform their compliance functions to navigate an increasingly complex regulatory landscape and leverage emerging technologies. 

What is a compliance function or role of compliance

A compliance function is an organisation's department or team responsible for ensuring the company adheres to applicable laws, regulations, and internal policies. It acts as a bridge between the business and the regulatory world, advising on compliance requirements, developing and monitoring internal controls, and reporting on compliance performance. Essentially, it helps prevent financial losses, reputational damage, and legal repercussions arising from non-compliance.