Banks and investment firms in the European Union must maintain boardroom accountability and adhere to legal obligations to protect customers when utilizing artificial intelligence (AI), the bloc’s securities watchdog declared in its inaugural statement on AI.
On Thursday, the European Securities and Markets Authority (ESMA) outlined how financial firms in the 27-member bloc can integrate AI into their daily operations without breaching the EU’s MiFID securities regulations.
While AI offers potential benefits for improving investment strategies and client services, it also introduces significant risks, particularly concerning retail investor protection, ESMA noted.
“Crucially, management bodies retain responsibility for decisions, regardless of whether those decisions are made by individuals or AI-based tools,” ESMA stated.
“At the heart of employing AI in investment services is the steadfast commitment to act in clients’ best interests, an essential requirement that applies regardless of the tools a firm uses to deliver its services.”
The statement addresses not only scenarios where AI tools are developed or adopted by a bank or investment firm but also the use of third-party AI technologies, such as ChatGPT and Google Bard, with or without senior management’s direct knowledge and approval, ESMA said.
“The management body of the firm should possess a proper understanding of how AI technologies are implemented and utilized within their organization and ensure appropriate oversight of these technologies,” ESMA emphasized.
The statement emphasizes compliance with MiFID and is distinct from the EU’s forthcoming landmark AI regulations, which take effect next month and may set a global standard for the technology’s use in business and everyday life. Additionally, the Group of Seven (G7) economies are making global efforts to establish guidelines for the safe development of rapidly evolving technology.
