Artificial Intelligence: Challenges and Opportunities for Compliance

AFME and PwC jointly published a report titled „Artificial Intelligence: Challenges and Opportunities for Compliance“, examining the impact of AI on compliance within the financial industry. It highlights two primary challenges faced by compliance officers in the context of AI adoption.
Firstly, compliance officers need to gain a thorough understanding of how AI is utilized in the Front Office of financial organizations. This understanding is essential to provide effective advice and oversight when implementing AI-driven solutions.
Secondly, compliance teams must explore how AI can be integrated into the Compliance function itself to enhance its efficiency and effectiveness. This involves adapting to new technology and leveraging AI capabilities to improve compliance processes.
The report also delves into the effects of AI adoption on the Compliance function, discussing both the benefits and risks associated with AI in compliance. It emphasizes that while AI doesn’t fundamentally alter the role of compliance, it can lead to changes in the skill sets required by compliance officers.
Regulatory considerations are another important aspect covered in the report. It stresses the need for firms to align their AI initiatives with existing regulatory frameworks and anticipates future regulatory developments, such as the EU AI Act.
To assist compliance teams in incorporating AI, the report offers recommendations. These recommendations revolve around robust governance, comprehensive risk analysis, and adopting an end-to-end approach to compliance.
In terms of governance and oversight, the report reveals that many firms do not currently have distinct AI frameworks and policies in place. However, a significant portion of these firms plans to develop such frameworks in the future. AI risk management is typically integrated into existing governance structures, with a focus on adapting to the challenges presented by AI.