Amidst a pro-business sentiment and a penchant for deregulation, it is assumed that a new Trump administration means that regulations across the board will ease up. 

But in the current very complicated world, the situation is not that simple. 

National security issues

Certain industries will of course experience less enforcement pressure – think energy and healthcare. But that’s not the whole story. National security and geopolitical tensions will impact the approach to compliance issues like sanctions, anti-money laundering (AML) and cybersecurity with even greater attention likely paid to their enforcement. 

In addition to national security, money laundering is closely tied to issues like organized crime and terrorism financing. This nearly ensures a strong focus on AML compliance as well as enforcement. Financial institutions and other in-scope entities will probably maintain their reporting requirements especially customer due diligence (CDD) and suspicious activity reports (SARs). 

There will likely be a move to streamline regulations to reduce burdens on businesses, especially smaller ones. The new administration has stated that its focus is on cutting red tape and might push for better coordination among enforcement agencies. 

The focus shifts to China

Export controls are a high priority for the incoming administration with a focus more on China and Iran and national security-related industries, such as semiconductors and artificial intelligence. Companies using Chinese goods and subsidiaries in China/Iran-linked countries will likely face stricter US controls, including secondary sanctions. Compliance areas will involve US subsidiaries, supply chains and increased sanctions oversight. Compliance teams will need to update risk assessments, policies, training and monitoring and adapt their risk management to this new reality. 

The crypto bros are happy

A more lenient regulatory environment seems to be in the cards for cryptocurrencies. Trump has made clear his pro-crypto stance which could translate into less oversight on digital assets. Get ready for increased innovation in this sector but potentially increased risks of fraud and money laundering. For the financial sector in general, the increased sanctions targeting specific nations or sectors could make compliance in international banking more complex. As noted above, robust AML programmes will be required. 

DEI support will continue to wane

The administration’s stated skepticism toward ESG and diversity, equity, and inclusion (DEI) initiatives could lead to a rollback of federal incentives for these programs. There could be a reduction in enforcement of diversity-related regulations and a scaling back of affirmative action policies. This might impact areas like federal contractor requirements and companies will likely have fewer audits and less stringent oversight in this area.

Many organizations will likely continue to invest in DEI efforts to meet the expectations of employees, consumers and investors who increasingly value inclusive practices. For a compliance team, this means adapting to a potential regulatory slowdown while staying focused on DEI as a feature of the company’s corporate culture and reputation. 

Impact on the FCPA 

The crackdowns seen under the Foreign Corrupt Practices Act (FCPA) could also ease up under the new administration. Trump has been a vocal critic of the FCPA, even calling it a “horrible law” that puts American businesses at a disadvantage. This could mean a less aggressive approach to companies operating internationally regarding bribery cases. But prosecutors and regulators at the DOJ and SEC do operate with a degree of independence, and high-profile cases get headlines so compliance teams should still be vigilant. 

Federal vs. states

A wild card in corporate compliance is Trump’s interest in scaling back federal oversight. This could lead to changes in some state-level regulations, creating more complications for nationwide companies.

Ultimately, the regulatory landscape may shift and its spotlight may dim in certain areas but the risks are not going away. For compliance teams, this means staying compliant and maintaining robust monitoring and reporting systems will still be a top priority.

Join us for a special webinar: The US Election and Compliance – Navigating the challenges of the second Trump Administration.