The Executive Order on Artificial Intelligence (AI) by President Joe Biden, issued on October 30, recommends extensive guidelines for the management of this rapidly advancing technology. While the order lacks significant legal enforcement authority, it underscores various areas in which the President and his administration believe that US policymaking and regulatory agencies should take measures to ensure that AI technology and systems are "safe, secure, and reliable" before they are released to the public.
These recommendations encompass the establishment of "New Standards for AI safety and security," which entail the disclosure and testing of AI tools with potential risks in domains such as defense, national and homeland security, energy, cybersecurity, and the protection of consumers and businesses against fraud. Although the order does not explicitly mention the financial services industry, it is worth noting that AI and machine learning have been increasingly utilized by banks and financial institutions in diverse applications, particularly to fortify their systems and transactions against fraudulent activities and external threats.
Another aspect of the President's AI order that may have specific implications for the banking sector is the call for enhanced privacy protection measures. The Biden-Harris administration has urged Congress to pass bipartisan data privacy legislation to safeguard all Americans, with a particular emphasis on children, while also advocating the development of cutting-edge privacy-preserving technologies for federal agencies. Nevertheless, Senator Chuck Schumer, the Senate Majority Leader from New York, has indicated that legislative action on AI-related bills is likely to be several months away.
Equity and fairness are also central to this White House directive. It builds upon a prior Executive Order aimed at curbing algorithmic discrimination and aligns with statements made earlier this year by US Secretary of Commerce Gina Raimondo and Secretary of State Antony Blinken regarding consumer protection and the promotion of innovation and competition in the business sphere.
Furthermore, the new order underscores labor relations, criminal justice, housing, and healthcare components. The administration seeks to provide clear guidance to landlords and government contractors on the equitable utilization of AI algorithms. Additionally, federal agencies are tasked with defining and encouraging best practices for the investigation and prosecution of civil rights violations related to the use of this emerging technology.
As articulated in the President's fact sheet on the proposed policies, the United States holds a prominent position in AI technology and utilization. "America already leads in AI innovation—more AI startups raised first-time capital in the United States last year than in the next seven countries combined."
Within the United States, the primary focus for AI policymaking, as per the White House's stance, should revolve around enhancing research, fostering a fair and competitive environment, and expanding opportunities for highly skilled foreign workers to engage in AI initiatives and programs in the United States. Furthermore, the President hopes to strengthen international collaboration in deploying AI safely and securely worldwide.
