FINRA Guides Firms to Build Investor Protections Around AI Tools
The burgeoning use of generative artificial intelligence has impacted nearly every industry, including financial services. As questions arise about regulating these innovations, the Financial Industry Regulatory Authority (FINRA) recently updated its advertising regulation FAQs to offer compliance guidance for how broker-dealers can leverage AI chatbots and approach AI-generated communications.
Focus on Investor Protection
One of the key aspects emphasized in FINRA's guidance is the focus on investors as the primary audience for AI chatbots and AI-generated content. Compliance teams are required to adhere to FINRA rules whenever AI technologies interact with investors, ensuring that content is compliant with regulatory mandates.
Supervision of AI Chatbot Communications
FINRA's guidelines outline the supervision requirements for AI chatbot communications with investors, mirroring existing standards for retail and institutional communications. Firms must ensure that content shared through AI chatbots meets regulatory mandates and does not contain misleading statements.
Compliance Requirements for AI-Generated Content
Similarly, compliance requirements for AI-generated content align with supervisory standards for content shared with investors. Firms must follow review protocols outlined by FINRA to ensure compliance with regulations.
Establishing Policies and Procedures
It is essential for firms to establish policies and procedures for the deployment and use of AI chatbots, along with implementing safeguards for creating investor content using AI tools. These policies should address selection protocols for AI technologies, implementation considerations, and governance expectations.
AI-Assisted Compliance
AI-powered chatbots and assistants have become integral parts of collaboration applications, generating feedback and summaries. Compliance officers need to ensure that AI tools used for investor interactions have recordkeeping capabilities to comply with regulatory rules.
Review Technology Assistance
New approaches to content vetting using AI technology can enhance compliance with regulations such as FINRA Rule 2210. AI-based review technology can assist in automatically reviewing content and identifying potential issues for better compliance.
Embracing AI Tools for Compliance
As the use of AI-powered tools becomes more prevalent, embracing these technologies and investing in compliance processes aligned with FINRA's expectations can lead to successful outcomes for firms.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
