Ten Key Regulatory Challenges of 2026: Midyear
The core challenge remains…balancing the regulatory stack
Technological innovation, evolving supervisory priorities, the push for “modernization,” and increasing regulatory fragmentation—it’s a balancing act!
At this mid-point in 2026, we have reassessed our projected Ten Key Regulatory Challenges, finding that divergence continues to drive complexity, supervision and enforcement are sharpening focus, and the pace of regulatory change remains unrelenting.
Click the download button to read through each of these key risk areas in the KPMG Ten Key Regulatory Challenges of 2026: Midyear for a snapshot of “what happened,” “what to watch,” and related insights that may help you to “keep your balance.”
Ten Key Regulatory Challenges of 2026: Midyear
Balancing the Regulatory Stack
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01 Executing Mandates
- Supervisory and enforcement focus of federal agencies remains directed at core statutory authorities; material risks and actual harm; tailoring rules to size, scale, and risk profile.
- Regulators continue to exercise a “lighter touch” regarding supervision and enforcement while incentivizing companies to identify, mitigate, remediate, and self-report misconduct.
- Continued divergence across federal, state and global laws/regs; state laws fill perceived federal gaps; federal preemption possible in some instances.
02 Adopting Disruptive Tech & AI
- Federal regulators are working to adapt and/or revise guidance to define and incorporate AI models.
- Continued push for AI innovation, infrastructure, and security at the national level; efforts to promote private sector participation continue.
- Continued speculation for federal preemption and/or convergence of federal and state laws/regulations.
03 Maintaining Cyber & Data Security
- Federal regulators are advancing cybersecurity resilience through coordination efforts while state and local authorities are driving an expanded but more fragmented policy landscape tied to critical infrastructure and digital services.
- New guidance and adaptive frameworks signal an effort to secure data, software, and cloud ecosystems – balancing innovation, national security, and evolving privacy risks.
04 Mitigating Financial Crimes
- Ongoing “modernization” of BSA/AML/CFT supervision/enforcement, focusing on a risk-based approach, “higher risk” activities, innovation, and national security (e.g., terrorist financing, cybercrime, fraud, sanctions evasion, and human and drug trafficking) in line with the administration’s priorities.
- Recognizing increasing sophistication of sanctions evasion, continued use of, and changes to, sanctions and secondary sanctions (e.g., “shadow fleets”, “sham transactions”).
05 Averting Fraud & Scams
- Speed, scale, and complexity of frauds and scams continue at an accelerated pace, reaching historic levels of volume, variety, and cost; directly attributable to AI used by fraudsters.
- Frauds and scams exacerbated in part by digital assets, open banking, tech innovation, and M&A activities.
- Investigation/enforcement priorities guided by executive directives related to healthcare, procurement; trade, tariffs, and customs; sanctions; cartels and TCOs, and vulnerable persons.
06 Protecting Fairness
- Fairness laws continue in force with ongoing attention to disclosure clarity and accuracy; access to products, services, and opportunities; and protections against biased/unfair model outcomes; supervision and enforcement shift toward clear intent to “victimize” consumers/investors and evidence of actual harm.
- State AI focus on anti-bias/fair lending and UDAP type consumer protections, including children’s protections; some “safety laws” may be subject to federal legal challenge.
07 Ensuring Resiliency
- Continuing focus on organizations’ planning/preparedness to withstand or recover from significant market stresses and disruptions to critical infrastructure/services.
- Forward movement to increase transparency, explainability, and accountability; tailor regulations to institution size and risk profile; and reduce overlapping requirements.
- Increasing scrutiny on cyber- and technology-related risks including - AI governance, third-party concentration and cloud dependency - may demand new frameworks.
08 Driving Capital Formation & Growth
- Focus on capital growth initiatives including rising private credit, the role of nonbank finance, renewed interest in public market access, and a push for broader retail participation.
- “Open-mindedness” to innovation and market changes reflected in new charters and faster approvals along with attention to anti-competitive impacts and consumer protections.
09 Expanding Digital Assets
- Accelerating and widespread actions to structure markets and develop regulatory frameworks to facilitate and expand digital and other alternative assets.
- Recognition of a broad spectrum of risks, including market, capital, operational, fraud, and BSA/AML/CFT.
- Active support for licensing/chartering of novel/innovative business models and expanded consumer/investor access and market participation.
10 Enhancing Parties & Workforce
- Continued focus on full third-party lifecycle, including fourth parties, “gatekeepers” and beyond, due to increasing reliance and expansion of third-party managed services.
- Government and corporate reductions in force must be balanced with need for experienced, knowledgeable practitioners, especially in technology, cybersecurity, and digital assets; push for workforce development, security, and well-being.
“2026 is shaping up as a year of sharper focus and wider fragmentation: federal regulators are narrowing in on core priorities and material risk, even as state and global jurisdictions move in different directions. The implications are clear: managing the regulatory stack is now a strategic operating imperative.”
Laura Byerly
Managing Director, Regulatory Insights, KPMG LLP
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Laura Byerly
Managing Director, KPMG Regulatory Insights, KPMG LLP
Laura Byerly
Managing Director, KPMG Regulatory Insights, KPMG LLP