AI compliance: What regulators expect in the age of agentic AI

Yeah, I was going to say, I think this is an area

where this does make like this is a great business case for AI, right? Like supervision.

You know, we all know that lexicon based and search terms are not the most effective and has lots of false positives.

There's a lot of work that goes into it.

escalate and review and everyone has these processes.

And I think the reality is, I would assume, if the models work correctly and you're doing it, that this actually may work better, right? Using AI may actually work better than what we have now.

And I think, I don't think the regulators, I think, Robert, as you said, regulators are going to say, well, this method is wrong, but you just have to make sure it's working, right? So again, you have to do lots of All the stuff that you should be doing in terms of monitoring, how it's working, adjusting for new data sources, all the things that if you have a supervisory program you should be doing anyway, it's just using a tool instead of probably a lot of people reading and communications and stuff.

And I'm going to play the role of Anthony Diana here in talking about predicting dramatic changes in the future.

But I will say is things to look out for is that, look, reality is that, well, Robert is right.

Like there's been like analytics and things that have been a part of supervision for a long time.

The compliance industry in the matter of technology has been fairly slow.

to move into new and advanced technologies, right? Still heavy reliance on things like lexicons and the like, which we know are not great.

I mean, they're not great.

They were the only thing we had for a very long time, but it hasn't been as willing to move into these things.

I think with AI, just as a general rule, everybody wants to use AI on all the things now, and we're seeing a more greater willingness to adopt AI.

But one of the things that I... you know, from the legal industry that I think is fascinating.

And I think we should watch for it in the future in the compliance industry, right? We talk about the use of AI in the legal industry and the ADA has opinions out there about the use of Gen AI.

And one of the things I always point out in the ADA opinions that was fascinating to me is one of the things that they were talking about is that, look, while maybe we're not there yet, we are going to get to a point, their belief is that we're going to get to a point where you as a lawyer, you have to be using AI because that is the best way to give the best advice to your client, right? And while they're careful to say that's not a requirement right now, the view is looking into the future, Get ready now because we are going to get to a point where it's as common as saying, well, you know, if you're going to be doing research, you should be doing electronic research, not book research, because that is the best way to give competent legal advice to your client.

I do think in the future, and I don't think we're there yet, I think we may get to a point in the future where the use of AI is so prolific that the regulators may say, why aren't you? It is the best way to find, you know, issues.

It is the best way to find market manipulation.

It is better than these older methodologies that have been common in the past.

And it is accessible to everyone.

Part of reasonable is always taking into a size, right? The size of the organization and the means and things like that.

The regulators are very mindful of that.

But i do think eventually we will be in a position where it is the expectation and the norm and if you are not using it you are going to have to explain why your approach is reasonable when you are not using ai and i think again we may be years off from that but i believe it is coming and if you're a financial institution to be prepared you should be looking at the use of ai now and how do you incorporate it into your supervision process Right.