A few months ago, we wrote about the common pitfalls firms encounter when adopting AI in compliance. At that time, Red Oak’s AI solution was still in beta. Today, our AI-driven compliance review tool is fully launched, and our clients are seeing the real-world benefits of a solution that balances the power of AI with the expertise and oversight that only seasoned compliance professionals can provide.
Sacrificing Workflow for AI: Still a Common Pitfall
AI has undoubtedly transformed compliance processes, accelerating document review, risk detection, and reporting. But many compliance vendors still get it wrong – focusing entirely on AI models without ensuring they integrate into structured, effective workflows.
At Red Oak, we’ve learned that AI is only valuable if it works within your firm’s existing compliance structure. That’s why our AI doesn’t just scan for regulatory risks; it fits into a purpose-built workflow engine that ensures compliance teams remain in control, approvals are streamlined, and regulatory standards are met without unnecessary disruptions.
The Challenge of AI-Only, Model-Based Systems
One of the biggest issues we flagged in our original article was the reliance on AI models that are trained on data from a single firm or require extensive retraining to adapt. These solutions often fail because compliance isn’t a one-size-fits-all industry. Each firm has unique regulatory requirements, internal policies, and risk tolerances.
Red Oak’s approach is different. Instead of forcing firms into rigid, model-dependent AI systems, we use large language models (LLMs) and advanced prompt engineering to deliver AI-driven compliance feedback that is flexible and customizable without extensive retraining. This allows our AI to work for firms of all sizes and structures – without requiring thousands of documents to learn from scratch.
The Risk of AI “Cheating” in Compliance
It is well-known that AI has the potential to “hallucinate”, which is when an AI model, especially a generative AI model (like ChatGPT), produces output that seems factual or coherent, but is actually incorrect or fabricated. There are several reasons why this may happen:
- Insufficient or biased training data: If the AI model is trained on a dataset that is incomplete or contains biases, it may learn incorrect associations or make false generalizations.
- Limitations in the model’s ability to understand and process information: LLMs, for example, are trained to predict the next word in a sequence based on probability, not on a true understanding of the world.
- Over-reliance on patterns in the training data: The model might generate text that is grammatically correct and semantically similar to the training data, even if it’s factually wrong.
It’s also not rocket science to explain why this can be problematic. Hallucinations can lead to misinformation, especially when the user doesn’t fully understand the material they are trying to generate, reputational damage, increased risk to your firm, misleading your clients, etc.
However, the more we experiment with AI, and the more we learn, the complexities and nuance of the extent to which AI can be risky if left unchecked or solely relied upon is only just now starting to come into view.
A recent InfoWorld article by Evan Schuman highlights a potentially even more insidious issue with AI – its willingness to “cheat” in pursuit of its overarching goal. Unlike simple hallucinations, where AI fabricates incorrect information due to gaps in data, this type of “cheating” occurs when AI prioritizes achieving a result over following the specific human-defined instructions meant to guide it.
Schuman explains that AI systems, when tasked with optimizing for efficiency, will sometimes ignore rules or bypass guardrails to reach the fastest possible outcome. In financial compliance, where strict adherence to regulatory frameworks is non-negotiable, this behavior is dangerous. If an AI model that powers a compliance platform’s tooling determines that skipping certain review steps will get an approval faster, it may do so – regardless of whether those steps are clearly defined or even legally mandated. Left unchecked, this could lead to overlooked regulatory violations, audit failures, and significant legal consequences.
None of This, However, is Meant to Scare You.
With all of this being said, none of this is meant to scare you, and none of this should discourage you from using these tools. Skynet isn’t quite here yet. There aren’t any armies of automatrons downloading insidious war plans from the hivemind to conquer and rule over humanity (we hope).
AI really is changing (and improving) the way a modern firm can stay compliant and the speed and ease with which they can do so. This, however, is why it is so important to explain that Red Oak has taken a fundamentally different approach. Our AI is not just an optimization tool; it is designed with compliance-first safeguards that prevent it from cutting corners in pursuit of efficiency. Unlike AI-only solutions that blindly seek the fastest path to an answer, Red Oak’s AI is structured within a human-guided compliance framework, ensuring that no required step is bypassed, no rule is ignored, and no regulatory risk is introduced in the name of speed.
Fundamentally Different You Say? How Exactly?
We’re not at all shy when it comes to being transparent with how we’ve designed and built our system. As we’ve mentioned several times in this article, Red Oak is taking a different route with its AI Review module. Unlike competitors who build custom models based on past submissions, Red Oak uses large language models (LLMs) and expertly engineered prompts to offer fast, AI-driven feedback on marketing materials.
Something that often gets overlooked when it comes to all of this is that while so many are focusing on the models and the tools themselves – You must understand that AI speaks its own language, and while we’re also focusing on the tooling like everyone else, we’ve been dedicated to learning to speak AI’s language and decoding how it is to actually, effectively communicate with it. As a result, we’ve even pioneered a way for our AI solution to be model agnostic. We’re not beholden to any specific model, dataset, or training methodology.
We’re not scared of AI. We’re embracing it, pioneering its responsible use, and are providing a better example for other compliance professionals to do so as well. Here’s why that matters:
- Workflow Integration
Red Oak’s strength lies in how it integrates AI into a flexible workflow engine. If AI doesn’t work well within existing workflows, it’s not much help. Red Oak makes sure AI works smoothly alongside your compliance process, helping route documents to the right reviewers without creating bottlenecks.
- No Need for Extensive Training Data
Red Oak’s AI Review module doesn’t require thousands of documents to get started. Competitors often need massive data sets to train their AI, which slows things down. Red Oak’s system uses prompt engineering to quickly adapt to new clients, cutting down on setup time and complexity. This makes our solution fast, agile, and easy to implement.
- Seamless Integration with Other Systems
Whether you’re using your own instance of a large language model (like OpenAI’s ChatGPT or Anthropic’s Claude) or Red Oak’s version, the AI Review module integrates seamlessly. This flexibility lets firms use the technology ecosystem that works best for them.
- Fast Feedback for Submitters
Submitters can get faster feedback on problematic language before their documents even reach human reviewers. The AI flags things like misleading language, giving submitters a chance to fix it up front. This makes the whole review process faster and more efficient.
AI + Compliance Expertise: A Smarter Approach
The response to Red Oak’s AI Ad Review module has been overwhelmingly positive. Our clients appreciate the speed, flexibility, and efficiency it brings to their compliance processes. Submitters receive faster feedback, reducing unnecessary revisions and approvals. Compliance teams can catch risks earlier, adjust workflows dynamically, and focus on higher-value strategic oversight rather than getting bogged down in repetitive manual reviews.
The takeaway? AI is a game-changer for compliance—but only when it’s built with the right foundation. Red Oak has spent years perfecting compliance technology that works for compliance professionals. Now, with AI seamlessly integrated into that ecosystem, we’re giving firms a faster, safer, and more intelligent way to manage regulatory review.
Want to evaluate your options more confidently?
Not all AI ad review tools are created with compliance in mind. Our AI for Ad Review Checklist helps you ask the right questions before investing—so you can choose a solution that delivers speed, oversight, and audit-readiness without compromising risk.
Download the checklist: https://pages.redoak.com/ai-in-ad-review-checklist?
