AI on Trial: How Smarsh & AWS Are Rewriting Financial Compliance

PORTLAND, OR – December 04, 2025 – In the world of high-stakes finance, risk is a constant. But how global institutions monitor that risk is undergoing a radical transformation. A recent accolade awarded to communications intelligence firm Smarsh by Amazon Web Services (AWS) serves as a potent signal of this shift. Smarsh being named the 2025 Vertical Technology Partner of the Year is more than just a corporate milestone; it’s a validation of a new paradigm where artificial intelligence and cloud computing are becoming the central nervous system for regulatory compliance.

For decades, compliance departments have fought a losing battle, manually sifting through mountains of emails and recorded calls. Today, that mountain has become an entire mountain range. The explosion of communication channels—from Microsoft Teams and Slack to Zoom and WhatsApp—has created a petabyte-scale data deluge that legacy systems simply cannot handle. This isn't just a storage problem; it's a risk management crisis. Buried within these billions of daily interactions are the critical signals of misconduct, fraud, and regulatory breaches that can cost firms billions in fines and irreparable reputational damage. The old way is broken, and regulators are taking notice.

The Unseen Risks in Digital Conversations

The modern financial landscape is defined by speed and complexity. This has forced regulatory bodies like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) to intensify their scrutiny. They are no longer just asking if firms are retaining communications; they are demanding to know how firms are supervising them effectively across all platforms.

This pressure comes at a time when financial institutions are themselves eagerly adopting AI to gain a competitive edge in trading and customer service. Yet, this creates a paradox. The very technology driving innovation is also introducing new, complex risks. Unsanctioned use of generative AI by employees—so-called "shadow AI"—can lead to the leakage of proprietary data or the creation of unapproved public communications. FINRA’s recent guidance (Notice 24-09) made it clear: firms are responsible for all communications, whether created by a human or an AI.

This environment has rendered traditional compliance methods obsolete. Manual, keyword-based review systems are notorious for generating a high volume of "false positives," forcing compliance teams to waste countless hours reviewing benign conversations while potentially missing genuine threats. It’s an unsustainable model that is both expensive and ineffective, leaving firms dangerously exposed in an era of heightened oversight.

A Blueprint for Proactive Oversight

This is the challenging landscape that the collaboration between Smarsh and AWS is built to address. By combining Smarsh's AI-powered Communications Intelligence Platform with the immense scale and power of AWS's cloud infrastructure, they offer a blueprint for modernizing compliance from the ground up. The recent AWS Partner Award, which was evaluated by the independent firm Canalys with a focus on customer success, underscores the real-world impact of this approach.

Instead of reactive, manual spot-checks, the platform enables proactive, intelligence-driven risk management. It captures and analyzes communications data from over 180 channels in near real-time. By applying sophisticated AI and machine learning models, the system can understand context, sentiment, and nuance, dramatically reducing false positives and allowing compliance officers to focus on the highest-priority alerts.

The results, as detailed in the case of one major global financial institution that standardized on the Smarsh platform running on AWS, are compelling. The firm reported a significant reduction in false positives, faster review cycles, and substantial time savings for its compliance teams. Crucially, it was able to retire costly and cumbersome legacy on-premise systems, lowering infrastructure costs while gaining greater transparency into its true risk posture.

"This recognition from AWS reflects the real, measurable impact our collaboration is delivering for customers," said Kim Crawford Goodman, CEO of Smarsh, in a statement. "We’re helping the world’s most complex, highly regulated organizations modernize in the cloud, strengthen their risk posture, and harness the power of AI responsibly and securely."

Taming the AI Beast: Governance as a Service

While AI offers a powerful solution, its implementation in a regulated industry is fraught with peril. Concerns over algorithmic bias, data privacy, and the "black box" nature of some AI models are top of mind for executives and regulators alike. A financial services firm cannot simply deploy an AI tool without rigorous governance and oversight.

The Smarsh and AWS collaboration directly addresses this challenge by providing a framework for responsible AI adoption. The platform is not just about finding risk; it's about creating a defensible, auditable trail of supervision. By centralizing all communications data within a secure, cloud-native environment, it provides the necessary guardrails for firms to leverage AI safely. The system ensures data is immutable and retained according to stringent regulations like MiFID II and GDPR, while advanced AI models are used to flag potential compliance breaches for human review.

This approach helps financial institutions navigate the fine line between innovation and regulation. It allows them to embrace the benefits of AI for risk detection while maintaining the robust governance structures that regulators demand. In essence, it helps tame the AI beast, turning a potential liability into a powerful asset for institutional integrity and protection.

The Marketplace Effect: A Barometer of Industry Transformation

Perhaps the most telling indicator of this market shift is a financial metric: Smarsh has transacted more than $100 million in annualized total contract value through the AWS Marketplace. This figure is significant not just for its size, but for what it represents about the changing nature of enterprise software procurement.

Cloud marketplaces like AWS's have become powerful engines for growth, allowing established enterprises to bypass lengthy, traditional procurement cycles and purchase vetted, integrated solutions directly through their existing cloud accounts. For an ISV (Independent Software Vendor) like Smarsh, achieving this level of transaction volume signals deep customer trust and a seamless product-market fit. Companies like CrowdStrike and Snowflake have demonstrated that the marketplace is a channel for billion-dollar success stories, and Smarsh’s performance places it among the significant players leveraging this ecosystem.

This marketplace success is a powerful validation. It shows that financial institutions are not just experimenting with cloud and AI for compliance; they are actively investing and scaling solutions that deliver proven ROI. It reflects a broader industry trend where the agility, scalability, and security offered by strategic cloud partnerships are no longer optional but are fundamental to navigating the future of commerce and risk in an increasingly complex digital world.