Why are chief financial officers struggling to stay compliant?

Expanding regulatory requirements are adding to the pressures facing CFOs, with 57 percent of finance leaders struggling to stay compliant as a result, according to Basware’s AI to ROI report. This added pressure is also holding back wider goals within the finance function, with 28 percent labeling regulatory and compliance challenges as their biggest barrier to finance transformation.

The crux of the challenge for CFOs maintaining compliance is the expanded nature of their roles, as well as the importance of compliance within their roles. Tax, regulatory, and financial compliance, among other forms, have long been core to the compliance remit of CFOs, but increasingly, they are being tasked with overseeing wider compliance activities.

The all-action CFO

Areas such as Environmental, Social, and Governance (ESG) compliance have become more important as ESG rises on the agenda of stakeholders, partners, and customers. At the same time, cybersecurity compliance has also risen in priority due to the evolving threat landscape.

CFOs are now expected to go beyond financial oversight and take on a more strategic role in compliance. In addition to ensuring regulatory adherence, they must implement robust internal controls, shape corporate governance policies, and foster a culture of compliance through staff training and awareness.

This shift demands new skills, including risk management expertise, data analytics proficiency to monitor compliance trends, and the ability to collaborate with IT and security teams to mitigate cyber risks. To manage this expanding remit, CFOs should leverage partnerships and technology solutions that streamline compliance processes and reduce operational strain.

The high cost of noncompliance

Regulatory compliance is no longer just a box-ticking exercise—it’s becoming a high-stakes, fast-moving challenge for CFOs. New mandates are emerging across multiple countries, including France, Germany, and Belgium, with European regulations like VAT in the Digital Age reshaping tax collection and reporting. Meanwhile, the EU’s Digital Operational Resilience Act is expanding financial leaders’ responsibilities beyond traditional reporting and governance, requiring stronger IT security and risk management. The financial penalties for noncompliance are rising, with regulators now focusing on individual accountability—meaning CFOs could personally face legal consequences for lapses in oversight.

Meanwhile, automated compliance monitoring and AI-driven reporting are changing the game, enabling CFOs to shift from reactive risk management to proactive regulatory assurance. To stay ahead, CFOs must integrate real-time compliance analytics, invest in digital audit trails, and collaborate with legal and IT teams to ensure resilience against evolving regulatory scrutiny. Simply maintaining the status quo is no longer enough—compliance strategies must be dynamic, data-driven, and future-proof.

The demands of the regulator

Regulatory frameworks such as the Sarbanes-Oxley Act outline clear standards for publicly traded U.S. companies across tasks, including financial reporting, and impose strict penalties for noncompliance, such as monetary fines to imprisonment in extreme cases. CFOs are in charge of overseeing compliance with these regulations.

In September 2021, Kraft Heinz Company was fined $62 million when the company and two former executives were charged by the SEC for participating in accounting misconduct, including maintaining misleading contracts to reduce costs and wrongly recognizing discounts in order to inflate the company’s financial records.

The SEC investigation forced Kraft to restate its financials in June 2019 to correct $208 million in false cost savings. The two executives were ordered to pay fines and prejudgement interest, with one of the two banned from serving as director at a public company for five years.

While many cases involve malicious intent, in cases of financial reporting, auditing errors are often complicated by high volumes of manual invoices and unstructured PDFs containing sensitive financial information, aspects that are easily controllable by finance teams.

How AI can bolster compliance

AI continues to be at the forefront of business strategies, resulting in a closer alignment between CFOs and their technology counterparts, Chief Information Officers.

Our AI to ROI survey found that 94 percent of finance professionals are already using AI in compliance activities to streamline operations. Working with CIOs, CFOs are increasingly exploring and implementing AI across finance operations to drive efficiencies and ROI.

However, it is important to understand that AI cannot be solely relied upon in this context as AI isn’t regulated for compliance use cases. Instead, it can be used for analysis and detection tasks to enable CFOs to make informed decisions faster.

The enterprise case for AI

Manufacturing giant Imerys provides a compelling example of how AI-driven automation can transform compliance operations. Operating in more than 40 countries and managing more than 10 disconnected enterprise resource planning (ERP) systems, Imerys faced inefficiencies that made financial processes cumbersome and compliance difficult. Instead of overhauling its ERP systems, the company implemented an AI-powered accounts payable (AP) solution that automated invoice processing, detected compliance risks in real time, and reduced manual intervention.

By learning from historical data, the AI system improved accuracy, flagged anomalies, and ensured invoices met regulatory requirements. Within just six months, Imerys deployed the solution across 14 countries, streamlining operations, reducing processing errors, and lowering compliance costs. Beyond operational efficiency, AI also proved to be a cost-effective investment—reducing manual processing expenses, accelerating approval cycles, and minimizing exposure to regulatory fines. By leveraging AI, Imerys demonstrated how enterprises can enhance compliance, integrate automation within existing systems, and achieve scalable regulatory agility across global operations.

Alleviating compliance pressures for CFOs

Alongside technology, partner organizations can also share the lifting for CFOs when it comes to compliance activities.

Partners such as Deloitte, for example, work closely with finance teams to implement a compliance-first approach within the fabric of their operations. This smoothens the compliance process and provides added expertise across core functions such as tax and invoicing compliance.

CFOs and compliance professionals are already feeling the pressure according to the data, and with the regulatory landscape only set to continue increasing in complexity, it’s vital that businesses take proactive steps and prepare themselves as best as possible for incoming regulations.

The penalties for noncompliance are too high not to and supporting CFOs in compliance activities should be a top priority.