Artificial intelligence (AI) is revolutionizing the financial services industry, particularly in regulatory compliance and risk management. As financial firms adopt AI tools for trade surveillance and reporting, they face critical questions about governance and accountability. AI offers the promise of faster data analysis and predictive risk assessments, helping firms navigate the complexities of regulations like MiFID II and ESG disclosures. However, its “black box” nature raises concerns about transparency and accountability, potentially increasing reputational risks. Regulators are adapting, with frameworks like the EU’s AI Act emphasizing AI governance. Compliance professionals must integrate AI oversight into existing risk management strategies—validating tools and documenting decision-making processes. Rather than replacing roles, AI is shifting compliance duties to a more strategic focus, requiring a blend of regulatory knowledge and technical skills. Firms that responsibly embed AI within robust governance frameworks will be better positioned to meet evolving regulatory demands, ensuring that innovation aligns with accountability.
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