Akbar Lakhani discusses how it is important to recognize the increasing role of artificial intelligence (AI) bots in financial institutions considering today’s dynamic financial environment where change is constant and regulatory scrutiny is ever-present. Learn more about how for institutions, strict adherence to guidelines and lawful conduct in all aspects of operations are imperative to maintaining credibility and positive brand visibility.
In today’s dynamic financial environment, change is constant, and regulatory scrutiny is ever-present. For institutions, strict adherence to guidelines and lawful conduct in all aspects of operations are imperative to maintaining credibility and positive brand visibility.
Currently, the U.S. Securities and Exchange Commission (SEC) enforces Rule 17a-4, a regulation under the Securities Exchange Act of 1934 that outlines requirements for record retention by brokers and dealers registered with the SEC. While this rule primarily focuses on record retention for person-to- person communication exchanges, it is not far-fetched to anticipate the SEC extending these requirements to communications with AI GPT chatbots in the near term.
“Future-focused enterprises will take a proactive approach to embracing the AI chatbot backup challenge and developing solutions before it becomes a problem or regulatory requirement. To stay ahead of this scenario, firms may consider developing and implementing innovative solutions that solve for bot backups at their financial organization, while ensuring a stronger standard for compliance practices within the financial industry.”
Akbar Lakhani, a Director of Information Technology at an SEC-registered global alternative investment firm
Future-focused enterprises will take a proactive approach to embracing the AI chatbot backup challenge and developing solutions before it becomes a problem or regulatory requirement. To stay ahead of this scenario, firms may consider developing and implementing innovative solutions that solve for bot backups at their financial organization, while ensuring a stronger standard for compliance practices within the financial industry.
As an example, it is important to recognize the increasing role of artificial intelligence (AI) bots in financial institutions. These bots, such as AI GPT bots, are being utilized for various tasks ranging from customer service to data analysis. While their integration offers numerous benefits in terms of efficiency and productivity, it also has the potential to raise compliance concerns, especially regarding the proprietary documentation of exchanges for regulatory purposes. The SEC is diligently searching for various violations, including insider trading, market manipulation, fraud, compliance policy breaches, supervisory failures, recordkeeping deficiencies, market abuse, anti-money laundering violations, and other red flags, through electronic communications. This demands crucial attention to a strong compliance posture.
In designing tailored compliance solutions, firms should look to automate efficient processes, such as integrating ChatGPT functionalities within Microsoft Teams or other communication platforms. By doing so, this can enable all the AI chats, together with personal chats, to get backed up along with all other electronic communications, per a firm’s retention policy. t All exchanges with AI bots can then be securely archived and readily accessible for compliance purposes. Third-party archiving platforms can
assist in the retention and review of any such communications. By taking a forward-thinking stance, firms can facilitate streamlining adherence to protocols, as well as lessening the risk of conceivable exposures.
In an era where financial regulations are becoming increasingly stringent and enforcement actions are on the rise, ensuring comprehensive documentation of communications is essential for firms to avoid penalties and maintain their reputation. By implementing a system that automatically archives chats with AI bots, firms are better able to position themselves as industry leaders when it comes to compliance.
One of the key advantages of the approach outlined is its scalability and comprehensiveness. By integrating chat backup functionalities at the organizational level, firms can ensure that every employee’s interactions with AI bots are captured and stored in accordance with regulatory requirements. This holistic approach minimizes the risk of oversight and offers a high level of protection, in the event of regulatory inquiries or audits.
Furthermore, this approach underscores the importance of leveraging technology to enhance compliance practices. Rather than viewing AI bots as a compliance liability, firms are able to recognize their potential to streamline and improve regulatory adherence. Through judiciously adopting emerging technologies and skillfully weaving them into governance protocols, enterprises can achieve an advantageous position in the market arena.
Another notable aspect of this chatbot backup approach is its proactive nature. Rather than waiting for regulatory scrutiny to necessitate action, firms can take preemptive steps to lower the risk of compliance issues. Cultivating accountability and transparency creates a culture in which violations are less likely to occur in the first place.
This pioneering approach to backing up chats with AI bots represents a significant milestone in the evolution of compliance practices in the financial industry. Integrating technology, collaboration, and proactive strategy, this solution sets a new standard for regulatory adherence, while harnessing the benefits of AI-driven innovations. For firms that struggle to traverse the intricate web of financial rules, this is one example of how to implement an innovative strategy that satisfies business obligations and fosters productive technological and operational growth.
As an IT leader, I champion using AI to boost workflow and spark new ideas at my own company. We appreciate how these tools can cut down on cluttered processes and push forward growth. In checking codes for building apps, we embrace automated systems that can spot flaws far better than any human check could; this not only improves the software, but also reduces security risks. AI tools provide us with the ability to craft smart threat intel, which helps the firm stop cyber dangers early on. Additionally, by employing data analysis driven by AI, we are able to pull key facts from large data pools, deriving valuable information to fuel data-driven decision-making and refine operations.
About the Author
Akbar Lakhani is Director of Information Technology at an SEC-registered global alternative investment firm, where he leads engineering teams, builds complex IT infrastructure, drives cross-functional innovation and productivity, manages strategic planning and budgets, and develops systems and processes to deliver meaningful results while safeguarding assets. Throughout his 15-year career, Mr. Lakhani has specialized in driving transformative change by integrating strong technical expertise with strategic vision, inspired by a blended academic foundation that includes both M.S. and M.B.A. degrees in Information Technology. He also holds Microsoft Certification in SQL Server Reporting Services.
