{"id":4268,"date":"2025-02-28T22:04:34","date_gmt":"2025-02-28T22:04:34","guid":{"rendered":"https:\/\/fintech.global\/globalregtechsummitusa\/?p=4268"},"modified":"2025-10-31T12:34:53","modified_gmt":"2025-10-31T12:34:53","slug":"how-can-regtech-help-ensure-ethical-ai-compliance","status":"publish","type":"post","link":"https:\/\/fintech.global\/globalregtechsummitusa\/how-can-regtech-help-ensure-ethical-ai-compliance\/","title":{"rendered":"How can RegTech help ensure ethical AI compliance?"},"content":{"rendered":"

With the use of artificial intelligence by businesses and individuals alike exploding across the world, one of the biggest challenges going forward that is facing the industry is to ensure that AI remains ethical and well structured. How can RegTech help in this battle?<\/strong>\u00a0<\/strong><\/p>\n

South African RegTech firm\u00a0RelyComply<\/a>\u00a0stressed off the bat that AI has taken compliance by storm for opposing reasons.<\/p>\n

The company said, \u201cOn the one hand, the usage of AI in criminal acts (fake identities and documents to curb verification, for instance) is growing. But AI also provides the means to combat this: automating onboarding and transaction checks around the clock, flagging anomalies as they happen to reduce the risk of failed compliance, or letting criminality pass by undetected.<\/p>\n

\u201cAI\u2019s capabilities are brilliant for organisations to implement, so long as RegTech platforms utilising AI are doing so, they align with policies and regulations around ethics. The data science field is becoming more expert in fine-tuning AI\u2019s side effects of hallucinations or cognitive bias. It\u2019s not just a \u2018must have\u2019, as AI has to be accurate and fair to complement human-led AML compliance.\u201d<\/p>\n

RelyComply emphasised that there were enactments going on currently to ensure AI is used safely \u2013 with the EU\u2019s AI Act one key example, which categories AI by risk and introduced penalties for misuse.<\/p>\n

\u201cMore significant AI protocols may be enacted in countries where regulation is being introduced while others lag. Some RegTech may provide an answer by being agile to rapid changes in legislation, especially with software developed through consultations with AI expertise,\u201d said the firm.<\/p>\n

Despite this, the company stressed that AI governance around its use must also be widespread. Through the documentation of how AI-backed RegTech platforms run, the data they house, how their models work and underlying AI code, this means auditing its usage is more transparent.<\/p>\n

The company continued, \u201cGiven RegTech\u2019s interoperability with partners (for system capabilities or data handling), AI life cycle management is needed to ensure the safe cross-compatibility of any data-led decision-making tools and to identify to shareholders that the technology is working as it should.<\/p>\n

\u201cUsing AI ethically is another collective responsibility between governments, businesses, RegTechs, and regulators that is integral to maintaining compliance. Great AI practice is a skill becoming more critical in this data-rich ecosystem; having more controlled standards by which to use it, with flexible RegTech solutions, should see safer, more informed uptake across the globe,\u201d said RelyComply.<\/p>\n

A crunch issue<\/strong><\/p>\n

According to Madhu Nadig, co-founder at\u00a0Flagright<\/a>, as AI becomes a bigger part of financial decision-making, ethical AI compliance is turning into one of the biggest regulatory challenges of our time.<\/p>\n

He said, \u201cBias in AI models, lack of transparency, and unethical automation can lead to unfair banking decisions, discrimination, and regulatory fines.\u201d<\/p>\n

RegTech, Nadig commented, can play a huge role in solving this. Some of the keyways include making AI explainable and transparent \u2013 as regulators want AI models that work, he said, in addition to justifying their decisions. RegTech solutions, Nadig added, can also ensure AI-drive compliance systems log every decision, making them auditable and fair.<\/p>\n

Another important area RegTech can help is with bias detection and model validation. \u201cAI can unintentionally reinforce biases if trained on flawed data, and RegTech platforms can continuously monitor AI models for discrimination, ensuring compliance with ethical AI regulations,\u201d Nadig said.<\/p>\n

Nadig also mentioned real-time compliance monitoring as a key area for RegTechs in ensuring ethical AI compliance.<\/p>\n

He said, \u201cAI models need constant supervision to ensure they align with ethical standards. RegTech tools can track AI behavior in real-time, flagging any irregularities before they become legal issues.\u201d<\/p>\n

Nadig gave the example of AI-driven loan approvals. \u201cIf an AI model unfairly rejects certain demographics, RegTech solutions can detect this bias, log the reasoning, and alert compliance teams before regulators step in.\u201d<\/p>\n

On the same highway<\/strong><\/p>\n

In the opinion of Ois\u00edn Boydell, chief data officer at\u00a0Corlytics<\/a>, AI compliance and AI regulation are two directions of the same highway, that are closely linked.<\/p>\n

He said, \u201cCompliance, in general, is complex due to varying jurisdictional requirements, and AI is no exception. This regulatory challenge as any other is precisely why RegTech and specifically Corlytics exist.<\/p>\n

\u201cJust as regulations shape how AI can be used, AI itself is being leveraged to manage compliance and risk. We can say that RegTech plays a dual role: it helps organisations navigate evolving AI regulations while also using AI to enhance compliance processes. At Corlytics, we apply AI to help companies stay aligned with regulatory expectations, including AI-specific compliance requirements.\u201d<\/p>\n

Regulatory change management<\/strong><\/p>\n

RegTech firm\u00a04CRisk.ai<\/a>\u00a0detailed that in its view, RegTech can help ensure ethical AI compliance through regulatory change management and compliance framework analysis to understand what AI regulations are required by a firm, and further, how the framework has the right policies and controls in place to ensure compliance.<\/p>\n

The company said, \u201cAt 4CRisk, we do this through our AI-powered Regulatory Change Management and Compliance Map products that provide traceability from regulations right through obligations and into policies, procedures, risk and controls, so that companies can see gaps in compliance.\u201d<\/p>\n

In a similar vein, Anthony Quinn, CEO and founder of\u00a0Arctic Intelligence<\/a>, commented that as AI becomes more widely adopted, RegTech firms are \u2018uniquely positioned\u2019 to ensure that AI is used in ways that are fair, transparent, free from bias and remain compliant with global regulations.<\/p>\n

Quinn added \u201cIt sounds obvious but ensuring AI remains unbiased, explainable and auditable will help ensure supervisors can adequately provider effective regulatory oversight, if RegTechs play an active role in demystifying the \u201cblack box\u201d problem, where early adopters of AI RegTech solutions can be confident in explaining how the technology works, as well as any limitations or shortfalls\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"

With the use of artificial intelligence by businesses and individuals alike exploding across the world, one of the biggest challenges going forward that is facing the industry is to ensure that AI remains ethical and well structured. 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