Enhancing risk and compliance monitoring systems with artificial intelligence to achieve regulatory transparency and accuracy

In line with principles espoused by financial services regulators across the globe, national or international supervisory or regulatory bodies will need to promulgate AI governance frameworks applicable to supervised financial institutions. Within financial services, the development of AI model governance is equally nascent and urgently needed. To support deployment of AI by financial services firms, guidance needs to be offered on the design and operation of effective AI model governance frameworks. This text attempts to set the stage for future collaboration between researchers and the practitioners. It ultimately proposes two orthogonal paths, aimed at garnering insights from adjacent domains and building solutions that would leverage regulatory technologies and related, cutting-edge tooling. In terms of domain cross-fertilization, solutions in adjacent domains with more robust AI governance, such as healthcare and autonomous vehicles, will need to be studied for applicability to financial services. Solutions developed in the financial domain with compliance oversight view would also benefit other industries with large and robust AI model frameworks in development.