In an attempt to take preventative measures on potential AI issues, federal financial regulatory agencies, including the Federal Reserve Board, the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA) and the Office of the Comptroller of the Currency (OCC) are gathering insight on financial institutions’ implementation of AI. To better understand the use of AI, the agencies request information on how financial institutions use this technology in their provision of services to customers and for other business or operational purposes; appropriate governance, risk management, and controls over AI; and any challenges in developing, adopting, and managing AI. The purpose of the request for information is to determine whether any clarifications from the agencies are necessary for financial institutions to use AI in a safe and sound manner, and in compliance with applicable laws and regulations, including those intended for consumer protection.
AI may present risk management challenges to financial institutions in the areas of explainability, data usage, and dynamic updating. Accordingly, the federal agencies’ request is tailored to specific inquiries, including insight into AI’s general approach and reaction to unforeseen circumstances; financial institutions’ oversight of third party developers of AI; and AI’s ability to learn and intuitively evolve with new data. It is the federal agencies’ intention that these insights will allow regulators to better understand the complexity of AI technology and its uses in the financial industry, especially in the realm of consumer services.
The federal agencies encourage interested parties to submit written comments in response to their inquiries, which will accepted collectively by the agencies until June 1, 2021.
For more information on how industries can effectively navigate the potential risks of AI technology, be on the lookout for Stephanie Wilson, Esq. and Diane A. Bettino, Esq.’s upcoming article titled Artificial Intelligence & Discrimination: Combating the Risk of Bias in AI Decision-making.
Client Alert 2021-108