Differences between key EU and US rules represent the greatest compliance challenge faced by Irish financial services organisations in 2026 – according to two in three compliance professionals in Ireland’s financial services industry.
Russia’s ambitions in Eastern Europe (37pc), conflicts in the Middle East (32pc), and the prospect of an AI stock market bubble bursting (25pc) are also expected to create major difficulties for the sector.
According to the findings of a nationwide survey by the Compliance Institute of over 150 senior compliance professionals working across Irish financial services organisations, nine out of ten financial services firms believe that Irish regulations go beyond EU rules, creating extra burdens for the financial services sector.
Top 10 Compliance Challenges for 2026
The Compliance Institute survey asked senior financial services executives to state the developments or geopolitical trends which they believe will create the greatest compliance challenges for the Irish financial services sector by 2026. It found that the Top 10 compliance challenges facing Irish financial services sector as they head into 2026 are:
- US-EU divergence (66% of compliance professionals said this will create the greatest compliance challenges for the Irish financial services sector)
- Russia’s ambitions in Eastern Europe four in ten (37%)
- EU simplification agenda (35%)
- US deregulation (33%)
- Middle East conflicts and sanctions (32%)
- An AI market correction (25%)
- A major EU regulatory rollback on ESG (25%)
- China–EU/US decoupling or tensions (17%)
- Lack of EU consensus on immigration policy (17%)
- Enhanced trading relationships between China/India and the EU (9%)
Commenting on the survey findings, Micheal Kavanagh, CEO of the Compliance Institute said:
“Our survey found that the US approach to regulation – including its ambitious deregulatory agenda and the extent to which the US and EU diverge on key rules – are amongst the top challenges that compliance professionals in the Irish financial services sector expect to encounter in 2026. Given the ongoing concerns around the softening of US data privacy and cybersecurity rules, as well as the Trump administration’s rollback of ESG (Environmental, Social and Governance) regulations, this is perhaps unsurprising.
Uncertainty about the US policy environment has the potential to hurt businesses worldwide and may lead firms to hold back on investment decisions, and thus potentially damaging the world economy. The US divergence from EU standards also complicates compliance strategies and could expose Irish firms to reputational risk when operating across jurisdictions.
The US rollback of ESG policies, which included exiting the Paris Agreement and backtracking on sustainable investment rules and DEI, marks a significant shift in US policy and has triggered huge concerns amongst climate activists, compliance professionals and the wider public alike.
Our survey also shows the extent to which geopolitical risks are weighing on this country’s compliance professionals. It is proof of just how globally interlinked regional conflicts are and how interconnected the global financial system is. Rising oil prices, soaring inflation, disrupted trade routes and volatile financial markets often arise following geopolitical instability. No matter how far away or localised a conflict is, compliance professionals must constantly identify, assess, mitigate, and prepare for geopolitical threats to ensure their organisations avoid legal, financial and reputational damage.”
From EU red tape to AI
A recent push by the European Commission to reduce red tape in order to make the European Union more competitive will also add to the workload of the Irish financial services sector by 2026, with more than one third (35%) of compliance professionals citing this as a top challenge.
Interestingly, one in four (25%) of those surveyed believe that an AI market correction could create a major compliance challenge for the Irish financial services sector by 2026.
Mr Kavanagh explained:
“The surge in the value of many tech firms has prompted concerns about how realistic such valuations actually are and so fears that there is an AI bubble about to burst are mounting. It’s perhaps no surprise then that an AI stock market correction ranks amongst the top challenges which compliance professionals expect in the New Year.”
‘Goldplating’
Another key finding from the Compliance Institute survey is that nine out of ten compliance professionals believe that Irish regulation goes beyond EU rules, creating extra burdens for the financial services sector (see Table 2 in Appendix). One in three (33%) of those surveyed said this was “definitely” the case while almost six in ten (58%) said it was “somewhat” the case.
Mr Kavanagh added:
“These findings of our survey highlight a growing unease within Ireland’s financial services community that our competitive edge could be dulled by excessive or overlapping rules. Strong regulation is vital, but it should also remain proportionate, consistent and easy to apply in practice.
Gold-plating, where national regulators apply additional requirements beyond EU rules, is often introduced with the best of intentions, but in practice it can lead to unnecessary complexity, particularly for smaller firms that lack the resources of larger institutions. A clearer and more streamlined approach would help maintain confidence in the system while allowing businesses to operate efficiently and continue to innovate.
To stay competitive within the EU, Ireland must avoid adding requirements that go beyond what is necessary.”
