Businesses Already Face AI Compliance Issues With Existing Laws
As artificial intelligence (AI) continues to evolve, it is projected that by 2028, AI agents will account for up to 15% of daily business decisions. However, while companies are eager to innovate, many are navigating a landscape fraught with compliance challenges.
The Compliance Landscape
Despite policymakers’ focus on establishing new AI-specific regulations, many businesses remain unaware that their current AI implementations may violate existing laws. The reality is that the “Wild West” of AI is not characterized by a lack of regulation but rather by a rush to deploy powerful tools without fully understanding their legal implications.
The AI Action Plan from the Trump administration highlights the slow adoption of AI in heavily regulated sectors, such as health care, due to a complex regulatory landscape and unclear governance standards. As employees increasingly use AI to enhance their work efficiency, both approved and unapproved tools pose compliance risks.
AI Compliance Challenges
Legal professionals have observed that businesses deploying AI often encounter unexpected compliance pitfalls. AI offers significant benefits, including:
- Enhanced efficiency
- Improved decision-making
- Supply chain optimization
- Customer service interactions
- Fraud detection
- Consumer trend predictions
However, AI tools also introduce unique compliance risks:
- Their speed and scale complicate persistent oversight.
- The “black box” nature of AI obscures where oversight is necessary.
- Preventing the release of sensitive data remains a challenge.
- AI systems may struggle to apply legal requirements correctly, even when trained on relevant laws.
Industry-Specific Risks
Highly regulated industries illustrate the difficulties of implementing AI tools:
Health Care
In health care, AI companies are developing tools to assist clinicians with tasks such as assessing scans and predicting conditions. Compliance with the Health Insurance Portability and Accountability Act (HIPAA) is mandatory for businesses handling patient medical data. AI tools must adhere to HIPAA’s strict rules, including obtaining patient consent and implementing technical access controls.
Defense Technologies
For defense contractors, utilizing AI in operations or research may involve compliance risks related to the Defense Federal Acquisition Regulation Supplement concerning data protection and supply chain requirements. Issues may also arise regarding export controls, necessitating careful technology choices to avoid sharing controlled technology with unauthorized parties.
Financial Services
In financial services, AI tools are effective for fraud detection and anti-money laundering compliance. However, risks associated with consumer protection and fair lending laws arise when utilizing AI for loan underwriting and credit scoring. The deployment of automated systems has drawn scrutiny from regulators, leading to mandates for expensive human customer support services.
Proactive Compliance Strategies
To navigate the compliance challenges associated with AI, companies should ask themselves the following key questions:
- Where exactly is your company using AI? Understand that AI may be embedded in more business functions than anticipated.
- What laws apply to your AI tools, and who’s watching them? Review automated functions to identify applicable legal and compliance requirements.
- Can you prove your AI follows the law? Document processes that demonstrate compliance with existing legal requirements.
- How are you managing compliance risk with your AI vendors? Establish oversight rights and incident response obligations in contracts.
- What’s your backup plan? Consider operational continuity plans for when AI tools need to be pulled offline for compliance reasons.
These inquiries are not mere academic exercises; they are essential for the responsible deployment of AI. Companies that succeed in navigating these challenges will be those that can innovate while adhering to existing legal frameworks.
