Global Regulators Turn to AI to Tackle Corporate Fraud, Strengthen Governance Frameworks

NEW YORK, Aug. 29, 2025 — Large-scale financial and accounting frauds in the history of the corporate sector globally have led to the creation of a foolproof corporate governance mechanism and brought in measures for the early detection of discrepancies.

With the growth of accounting firms, company laws have been strengthened, and corporate regulators are keeping a strict eye on violations. The advent of new-age technologies such as AI offers huge scope to boost different aspects of corporate governance and accounting

This week, when most of the listed entities in Australia are issuing Corporate Governance 2025 statements approved by their boards, the disclosures outline companies’ adherence to the ASX Corporate Governance Council’s principles and recommendations for the financial year ending June 29, 2025.

Corporate governance norms vary across geographies, but there are global principles and best practices set up by regulators, stock exchanges, international organizations, and institutional investors that define how companies should be directed and controlled.

Notably, the Board of Directors is another aspect that is always on the radar of regulators, who from time to time conduct status checks to see whether there is any conflict of interest and if norms such as maintaining gender balance in the Board are being followed.

Besides regulating the corporate sector with the help of company law, most regulators worldwide have been granted powers that help monitor anti-competitive practices.

Regulators keep organizing interactive programs with corporate houses to make them aware of evolving good practices in business. However, in many countries, law enforcement is strict in cases of money laundering or violations of the Income Tax Act.

Several nations are utilizing AI tools in foreign exchange management and the prevention of money laundering. However, it is not enough to adopt AI; it must be implemented responsibly, particularly in industries that manage sensitive data and operate under growing regulatory pressure.

How Can Fraudsters Be Denied Safe Havens

There has been a growing chorus to enhance cross-border collaboration of regulators and law enforcement agencies to ensure that perpetrators of white-collar crimes are held accountable. This includes fugitives who are tax defaulters or have turned into non-performing assets owing large amounts of money to banks.

The International Criminal Police Organization (INTERPOL) has time and again vowed the agency's full support to crack down on individuals on the run after committing discrepancies. However, there have been instances when certain countries are found to be non-cooperative in helping bring a fraudster to justice.

In the existing cross-border convergence, models such as Anglo-American compared to Continental European or Asian may differ, but the principles are aligning under OECD/G20 influence.

With AI gaining pace, there have been opinions that apart from an efficient and consolidated database of wanted white-collar crime accused, real-time monitoring of these individuals can help trace them.

Adoption of AI in Corporate Governance You Should Know

Ease of Tracking Various Domains: Almost all over the world, regulatory bodies have a task cut out to maintain a database of newly incorporated companies and even firms that have either become defunct or are in the process of insolvency. These are also areas such as the regulation of anti-competitive practices, where the role of AI can come into play.

Most importantly, as leaders of a company’s finance function, CFOs, CAOs, and controllers are responsible for evaluating the impact AI may have on the company’s ICFR, whether through the company’s direct use of AI or by relevant third-party service providers.

Role of Accounting Heads: It is important to understand the company’s AI strategy and communicate how it will likely impact the finance function.

CFOs are also expected to engage with relevant stakeholders to understand the company’s responsible AI practices and ensure consistent execution across the finance function.

They must also design and implement key controls over AI use cases to validate the completeness and accuracy of resulting outputs.

There should be an active discussion regarding the use of AI in the finance function with the external audit provider on a regular basis.

Innovation with Responsibility: While 73 percent of companies in North America plan to expand AI use, only 58 percent have assessed its legal or ethical risks.

This points to a disturbing trend, as embracing innovative solutions without responsibility jeopardizes both trust and business resilience. In Mexico, the situation reflects an overall lag, with many organizations still in pilot phases and lacking formal governance frameworks.

A recent report highlights that 95 percent of organizations already using AI lack structured governance models. Even more concerning, only eight percent have matured, fully integrated practices, while the majority rely on fragmented or entirely absent approaches.

Global regulators are leveraging AI to monitor financial activity, detect irregularities, and reinforce governance systems that ensure accountability and transparency across the corporate sector.

Inputs from Saqib Malik

Editing by David Ryder