I sense your frustration, and you are not alone. Whenever a new technology or innovation enters the marketplace, there is a perfectly normal tendency to be a bit suspicious and even worried about its implications. In time, these concerns often become resolved, sometimes with less than optimum impact on society, sometimes with far-reaching positive impact. The challenge is anticipating change and preparing proactively to mitigate unwanted outcomes.
I don’t think financial institutions should rush into Artificial Intelligence (“AI”) without first considering compliance. But, there are good reasons to implement AI as a tool in the quest for a strong compliance program. When planning to partner with an AI vendor, it is important to bring in a firm such as ours to provide reliable due diligence to ensure the compliance component is integral to the plan. This creates a “baseline” that serves to enhance policies and procedures, training, and ongoing improvements in the technological application.
Many banking agencies have been vetting AI for a few years. We’re still in the early stages of drafting the rulemaking, but there has been an increase in regulatory guidance issuances. As a provider of customized compliance libraries, we are updating our clients’ policies for such guidance. And when rulemaking is determined, we will provide an AI policy, specific to the client's needs, and prior to a promulgated effective compliance date.
We can glean the areas of scrutiny being reviewed for supervision, examination, and enforcement by taking note of the following ways financial institutions use or may use AI. Though not meant to be a comprehensive outline, based on our interactions with regulators and published issuances, I’m sure the following areas are under review for AI compliance.
