Regulatory enforcement actions against financial services firms experienced an unprecedented decline in the first half of 2025, with violation volumes plummeting 37% compared to the previous six months, according to new data from Wolters Kluwer Financial & Corporate Compliance's Regulatory Violations Intelligence Index.
Issued semi-annually, the Index leverages advanced analytics and comprehensive enforcement data to provide actionable insights on regulatory trends impacting U.S. commercial banks, insurers, broker-dealers, and other financial services firms.
The latest Index analysis of federal enforcement data reveals a seismic shift in the regulatory landscape, with monetary penalties dropping 32% across key violation categories tracked by the Index. Competition-related penalties (including anti-trust violations) experienced the most dramatic decline, falling an extraordinary 97% in dollar value during the first six months of 2025.
"We're witnessing a fundamental transformation in federal enforcement priorities," says Chuck Ross, VP and Segment Leader, Investment Compliance Solutions & Compliance Program Management, Wolters Kluwer FCC. "While deregulation was anticipated under the new administration, the velocity and magnitude of this enforcement pullback exceeds even the most aggressive predictions.”
Ross notes that the federal retreat is creating a regulatory vacuum that states are rapidly moving to fill—particularly in blue states. “Financial institutions face a greater patchwork of state-level enforcement that could be even more complex and burdensome than the federal framework it's replacing,” he says.
Key Findings from the H1 2025 Analysis:
Competition-Related Offenses:
- Enforcement actions cut in half (50% decline)
- Penalty values virtually eliminated (97% decline)
Consumer Protection Violations:
- Enforcement volume down 22%
- Monetary penalties reduced by 21%
Financial Offenses:
- Violation volume dropped 53%
- Penalty amounts decreased 24%
The analysis comes as federal agencies undergo significant restructuring and budget reallocations following the Trump Administration's "10-to-1" deregulatory initiative, which mandates the elimination of 10 existing regulations for every new regulation implemented. Simultaneously, the CFPB's withdrawal of 67 guidance documents has created regulatory gaps that state attorneys general and regulators are actively working to fill.
"This isn't just a modest adjustment—it's a complete recalibration of the enforcement ecosystem," adds Ross. "The data shows federal enforcement has essentially fallen off a cliff in certain areas, particularly around competition-related violations where penalties have been reduced to a trickle. But nature abhors a vacuum, and we're already seeing states step into this void with their own enforcement priorities and approaches."
The dramatic reduction in federal enforcement activity is being rapidly offset by increased state-level regulatory activity, creating a more complex compliance landscape for organizations operating across multiple jurisdictions. Industry experts note that states, particularly those with historically robust regulatory frameworks, are expanding their enforcement capabilities to address perceived gaps in federal oversight.
"The shift from centralized federal enforcement to a fragmented, state-by-state approach represents a significant operational challenge," notes Ross. "Organizations that previously dealt with a single set of federal requirements now face potentially 50 different enforcement regimes, each with their own priorities, procedures, and penalties."
Elaine Duffus, Senior Specialized Consultant, Wolters Kluwer FCC, adds: "We’re seeing state regulatory activity surge, particularly in areas where federal agencies have scaled back rules, guidance or enforcement. This uptick is also driven by evolving consumer protection priorities, and the desire of states to fill perceived regulatory gaps. For organizations operating across multiple jurisdictions, this means their regulatory change management systems must be more agile and robust than ever to keep pace with the expanding and increasingly complex landscape of state-level requirements."
"History shows us that enforcement pendulums swing," concludes Ross. "Organizations that maintain robust compliance frameworks during periods of light federal enforcement while adapting to the emerging state-level requirements are best positioned to weather future shifts. Those who mistake the current deregulatory regime as the new normal do so at their own peril—especially as states fill the enforcement void."