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Artificial Intelligence (hereafter “AI”) is an innovative technology that can positively affect the financial sector by enabling, for example, improved processes, enhanced fraud detection mechanisms, new customer insights, foster inclusion, etc. Nevertheless, AI also brings new challenges and risks to be considered for the regulator as well for the entities.
In the financial sector, AI may be seen in different use cases (e.g. chatbots, AML, robo-advice, credit scoring …) with different degrees of automation. While the potential benefits that AI can bring are enormous, these can only be achieved if the fundamentals of this technology and its underlying risks are well understood and an adequate control framework is put in place. While waiting for a European regulatory framework (the EU AI Act proposal), the CSSF has issued some documentation to assist regulated entities in understanding and evaluating the risks related to AI use cases in the financial sector.