In late-2022, the Financial Conduct Authority and Prudential Regulation Authority (the “Regulators”) jointly issued Discussion Paper DP5/22 (the “Paper”) soliciting feedback on the use of artificial intelligence and machine learning in financial services. In particular, the Regulators requested information about the potential benefits and risks of AI, regulatory considerations, and the use of standards in the development of AI. Theta Lake submitted a response to the Paper to outline its unique approach to AI and thoughts on appropriate application to compliance together with organizational and security controls.

Theta Lake’s response describes the following:

• Background about the Security and Compliance Suite, which uses AI to empower firms to compliantly enable collaboration features on platforms like Zoom, Webex, Microsoft Teams, and RingCentral such as voice, chat, video, whiteboards, and Q&A to increase employee productivity.
• Our approach to incorporating AI into risk detections for compliance, security, and privacy. And, more specifically, our coverage for FCA-specific risks such as MiFID II and PRIIP’s Key Information Documents. 
• An overview of the function of Theta Lake’s supervisory platform including the use of “human-in-the-loop” validation of identified risks.
• Theta Lake’s classifier audit report and processes for oversight and explainability of AI models.
• Suggestions about how standards like SOC 2 and ISO 27001 can be used to inform the secure development of AI technologies.
  
  

We hope you find our response to the Paper informative. Theta Lake’s regulatory and data science teams are happy to discuss any of the issues in greater detail. You can find further regulatory perspectives from Theta Lake here or you can request a demo today from our friendly team.