AI Governance

In a recent address, SEC Chair Gary Gensler highlighted the growing importance of Artificial Intelligence (AI) in the financial industry and the potential conflicts of interest that could arise from its use. Delivered on August 13, 2024, the speech underscores the increasing reliance on AI-powered algorithms by investment firms and the SEC's proactive approach to governing this evolving landscape. As AI becomes more entrenched in finance, the issues Gensler raises are vital for governance, risk management, and compliance (GRC) professionals to consider.

In a landmark development, the European Artificial Intelligence Act (AI Act), the world's first comprehensive AI regulation, has come into force this past Thursday. This legislation marks a pivotal shift in how artificial intelligence is governed, not only within the European Union but also on the global stage. For compliance professionals, the AI Act introduces a robust framework that necessitates a proactive and strategic approach to AI governance, risk management, and ethical considerations.

Competition authorities from the European Union, United Kingdom, and United States have recently issued a joint statement outlining their commitment to ensuring fair competition in the rapidly evolving field of generative AI. The statement, signed by top officials from the European Commission, UK Competition and Markets Authority, US Department of Justice, and US Federal Trade Commission, signals a coordinated approach to tackling potential risks in the AI ecosystem.

The decision by Meta, Facebook's parent company, to withhold its latest multimodal artificial intelligence (AI) model from the European Union marks a significant moment in the ongoing dialogue between Silicon Valley innovation and European regulation. This move, following a similar decision by Apple, underscores the growing challenges tech companies face in navigating the EU's evolving regulatory landscape.

The European Data Protection Board (EDPB) has taken several key actions during its latest plenary session held on July 17, 2024, in Brussels. The EDPB adopted a statement recommending that Data Protection Authorities (DPAs) play a crucial role in enforcing the AI Act. The Board suggests that DPAs should be designated as Market Surveillance Authorities (MSAs) for high-risk AI systems, particularly in sectors such as law enforcement, border management, and democratic processes. This recommendation aims to leverage DPAs' expertise in assessing AI's impact on fundamental rights, especially data protection.

The European Union has recently unveiled the AI Act, published on July 12, 2024, and set to gradually come into force from August 1, 2024. This landmark legislation, working in tandem with the existing General Data Protection Regulation (GDPR), establishes a comprehensive framework for the development, deployment, and use of artificial intelligence across the EU. As stakeholders grapple with the implications of this new regulatory landscape, the French data protection authority, CNIL, has stepped forward with guidance to illuminate the complex interplay between these two pivotal regulations.

The Bank for International Settlements (BIS) has issued a stark warning to central banks worldwide: adapt your AI governance frameworks now or risk being left behind. In a landmark report released on June 25, 2024, the BIS emphasizes that traditional governance models are inadequate for the AI-driven future of finance.