Limiting Risk of Black-Box AI for Financial Institutions


8 minute read | August.22.2024

  • In this Law360 article, partners Jeffrey Naimon and Caroline Stapleton help financial institutions take the steps needed to mitigate the regulatory and compliance risks created by black box AI tools in the financial services sector.
  • Regulatory agencies such as the Consumer Financial Protection Bureau and U.S. Department of Treasury have already stressed the importance of transparency in the way companies leverage AI to offer credit and other financial products to consumers. The article outlines three ways financial institutions can ensure compliance.
  • The steps include creating an AI inventory, remaining vigilant about when explanatory notification is needed for the use of AI and periodic risk assessment of AI models.