By Elise Gray, Head of CFO Support Services, U.S.
As global financial markets are now highly interconnected, CFOs are tasked with staying compliant with a patchwork of ever-evolving regulations.
In this article, using insights from our latest CFO survey report, we take a deeper dive into this core part of the CFO agenda, examining how firms are evolving their compliance strategies, where investment is being directed, and why the traditional view of compliance as a siloed function is quickly becoming obsolete.
Fragmented rules are adding pressure
Keeping pace with regulatory changes has long been on the CFO agenda, and for good reason. It was encouraging to see that only 31% of CFOs in our survey said that evolving regulations, such as the EU’s Alternative Investment Fund Managers Directive (AIFMD) II, have reduced time available for strategic planning and initiatives. But regulatory scrutiny is on the rise, and as firms seek broader investor bases, they’re entering jurisdictions where rules differ dramatically. Managing that exposure without duplicating effort or risk is becoming increasingly difficult.
Thinking about my own clients and network, I’d say that outsourcing has become the preferred solution, which may reflect the lack of CFO time being absorbed by this issue. You simply won’t find compliance experts in every jurisdiction, unless you’re hiring a huge legal team. But legal advice is not the same as compliance execution. You need multiple boots on the ground – people who understand local regulations inside and out, and can actively manage your filings, reports and communications. That’s why we’re seeing so many firms turn to global compliance partners who can operate under one umbrella and coordinate efforts across multiple countries.
The lack of coordination between local regulators – where managers are having to navigate a complex, interconnected web of different rules – further complicates the global compliance landscape. Your French regulator isn’t talking to your UK or American team, for example. You therefore need a communicative and collaborative team to work with; compliance today requires more cross-border project management than ever before.
Still, some experts believe the industry is yet to feel the full impact of these changes. Justin Partington, our Global Head of Fund and Asset Managers, noted in our survey report that “31% seems low” and highlighted the fact that regulatory changes tend to have delayed impacts. “The shift might take months, or even years, to fully trickle down through operational processes – so many managers may still be ‘waiting and seeing’ before responding. In Europe, for instance, the Omnibus package has been hugely watered down from its initial requirements, so many fund managers are still waiting to see how implementation will play out,” said Justin.
Recent developments in the U.S. reflect this dynamic, such as the Securities and Exchange Commission (SEC) deciding to postpone the effective date of the Department of the Treasury’s Financial Crimes Enforcement Network’s (FinCEN) ‘Final Rule’ from January 2026 until January 2028, giving advisers another two years to adopt and implement a risk-based anti-money laundering and countering the financing of terrorism (AML/CFT) programme.
While FinCEN’s two-year pushback offers breathing room, advisers still need to prepare for these complex compliance requirements. The delay could even give regulators time to expand or refine the scope. At IQ-EQ, we’re encouraging clients to still treat this as a current priority, rather than something to worry about later down the line. This time can be used to properly budget, build and test AML/CFT frameworks that withstand scrutiny across multiple jurisdictions.
The patchwork of global regulatory requirements is making it difficult to innovate in the market. “There’s a broader market feeling that we may be starting to overregulate,” commented Justin. “But with AIFMD II and other reforms potentially coming in simpler than expected, some firms are cautiously optimistic that the next wave of regulation might not be as heavy-handed.”
Neil Synnott, Regional Chief Commercial Officer for Asia-Pacific, added that the complexity of global regulation is especially pronounced in Asia: “The rules really depend on what country you’re looking at – they greatly vary from country to country. Singapore has a huge focus on regulatory compliance, while Hong Kong has a regulatory regime that is not quite as deep or stringent. On the other hand, Japan is extremely highly regulated, and these rules are constantly changing. Just keeping up with the pace of change is a major time sink.”
How are CFOs easing the compliance burden?
Many CFOs are embracing new, digital-first strategies to cope with these growing compliance pressures across regions. To streamline their compliance processes, a third (33%) of CFOs surveyed have increased their investment in new reporting tools and technologies, while another third increased reliance on external legal advisers.
Commenting on compliance trends, Tamas Mark, Global Head of Real Assets, noted that “CFOs want regulatory updates and guides with excellent advice, and, because the landscape changes so quickly, they need these insights at their fingertips. There’s a plethora of external compliance advisers in the market, and clients are seeking out those with a strong reputation and proven track record in the jurisdictions in which they operate. The wrong partner can create risk, rather than reduce it.”
I’ve also observed a major shift in the way CFOs are structuring compliance teams. Today, we see more clients looking to outsource the Chief Compliance Officer (CCO) or Deputy CCO roles to trusted partners. They want the hands-on expertise, without needing to build an in-house team. This is a huge opportunity for service providers as these teams have the experience and information to meet complex regulatory requirements across regions.
The operational complexity introduced by recent regulatory updates underscores this trend. In August 2023, the SEC adopted its private fund adviser rules, aiming to greatly expand SEC regulation of private fund advisers, but the final version of these rules has since been scaled back.
Even in their final form, the SEC’s private fund reforms represent a major overhaul – with requirements like mandatory audits and quarterly statements adding new pressures to already stretched compliance and finance teams. Many managers will have to rethink their operating model, especially around investor communications, managing side letters and reporting workflows, to make sure they can deliver at scale without sacrificing timelines.
What’s more, 27% have implemented centralised data platforms for real-time reporting, while the same number have begun using AI tools for regulatory tracking and analysis. Eighteen percent also say they’ve streamlined workflows between compliance, legal and operations teams.
At IQ-EQ, we’re seeing a growing trend of clients requiring technology that can standardise and interpret complex datasets to meet both compliance demands and stakeholder expectations. More and more LPs are requesting standardised reporting tools that align with frameworks like ILPA. As a result, we’re building more advanced systems and dashboards that make it easier to fulfil these demands.
Technology is adding momentum to this trend, with IT teams becoming intrinsically more involved with compliance workflows – especially when it comes to building out reporting tools and visual dashboards. “The days of compliance being just a ‘tick-box’ activity are well in the past,” concludes Justin. “It’s a data-led, dynamic discipline.”
Finding clarity in a regulatory whirlwind
Once a siloed, secondary function, compliance is now emerging as a way to anticipate, adapt and thrive in a fragmented and fast-moving global environment. Yet from growing LP reporting demands to sweeping regulatory changes across jurisdictions, the compliance burden is getting heavier – and CFOs could be forced to shoulder it if their operations are not structured in the right way.
With a cross-section of technology, talent and the right external partners, the compliance function can be armed with the data and insights needed to stay on the pulse.
Want further insight into the challenges facing private market CFOs and how they’re pivoting their strategies to suit? Read our full CFO survey report.
