AI Regulation in the US: Understanding AI Compliance in Software Development
On May 16th, 2023, Sam Altman testified before Congress, indicating the urgent need for regulatory limits on AI systems. He warned, “If this technology goes wrong, it can go quite wrong,” highlighting the potential for significant harm to society. This sentiment resonated with lawmakers, who recognized the necessity of government involvement to mitigate risks associated with AI.
Initially a low-priority issue, discussions surrounding AI regulation in the US have intensified, creating uncertainty for businesses regarding their operational focus.
In August 2024, California’s proposed SB 1047, a groundbreaking bill aimed at preventing AI-driven disasters, was passed by the legislature and is awaiting final approval. This bill mandates that AI companies in California implement essential safety measures before training advanced models, including the ability to rapidly shut down models, protect against unsafe modifications, and test for catastrophic risks.
The increasing adoption of AI, alongside warnings from prominent figures like Altman, Steve Wozniak, and Elon Musk, as well as the passing of SB 1047 and a rise in lawsuits against AI technologies, underscores the demand for stronger regulations in the US.
The History of AI Regulation in the US Across Administrations
Over the years, various federal agencies have introduced artificial intelligence compliance regulations, each reflecting the priorities of different administrations.
Obama Administration
The Obama administration laid the groundwork for AI regulation in a public report titled “Preparing for the Future of Artificial Intelligence,” issued in October 2016. This report explored AI’s economic impact and examined issues of fairness, governance, safety, and global security.
Trump Administration
In February 2019, President Trump signed Executive Order 13859, known as “Maintaining American Leadership in Artificial Intelligence.” This order initiated the American AI initiative, setting the stage for technical standards aimed at reducing barriers to AI technologies while safeguarding civil liberties, privacy, and economic security.
Biden Administration
In October 2022, the Biden administration introduced the Blueprint for an AI Bill of Rights, outlining five principles to guide the design and deployment of automated systems to protect the public in the age of AI. Further, in February 2023, President Biden signed an Executive Order aimed at advancing racial equity and preventing algorithmic discrimination.
On October 30, 2023, Executive Order 14110 was signed to harness AI for good while mitigating its risks. This order includes eight focus areas: Safety and Security, Innovation and Competition, Worker Support, AI Bias and Civil Rights, Consumer Protection, Privacy, Federal Use of AI, and International Leadership.
The AI Bill of Rights: Guidelines for AI Development
The AI Bill of Rights, created by the White House Office of Science and Technology Policy, emphasizes creating transparent, safe, and non-discriminatory AI systems. It addresses civil rights issues in sectors such as education, hiring, healthcare, and surveillance.
Key Principles
- Effective and Safe Systems: Protection against unsafe automated systems is essential. Diverse experts should be involved in AI development, ensuring systems undergo thorough testing and monitoring.
- Algorithmic Discrimination: Developers must take proactive measures to prevent discrimination, including equity assessments and data representation.
- Data Privacy: Individuals should control their data, with AI designers required to seek explicit consent for data usage.
- Notice and Explanations: Users should be informed when AI systems impact them, with clear explanations of the decision-making process.
- Human Alternatives: Users should have access to human assistance if they opt out of automated systems.
The Executive Order: Key Actions for AI Development
The Executive Order outlines seven key actions to ensure responsible AI development:
- New Standards for AI Safety and Security: Developers must share safety results with the government and create tools to ensure AI systems are secure.
- Protecting Americans’ Privacy: Emphasizes the need for privacy safeguards and evaluation of data usage.
- Advancing Civil and Equity Rights: Addresses algorithmic discrimination and maintains fairness in various sectors.
- Standing up for Patients, Customers, and Students: Promotes responsible AI use to enhance product quality and accessibility.
- Supporting Workers: Encourages practices that benefit workers while mitigating AI-related risks.
- Promoting Competition and Innovation: Fosters a competitive AI ecosystem and encourages skilled labor recruitment.
- Effective and Responsible Government Use of AI: Aims to leverage AI for better government outcomes and efficiency.
Preparing for AI Compliance in Software Development
As AI regulation evolves, businesses must proactively prepare for compliance in software development. Here are key strategies:
Know the AI Model
Identify how operational decisions rely on AI and assess dependencies.
Set the Foundation for AI Adoption
Establish policies governing AI use, focusing on monitoring, data integrity, and social impacts.
Design Accountability Structures
Create a dedicated compliance function responsible for managing AI policies throughout the organization.
Conduct Risk Assessments
Perform risk assessments before implementing new AI models, establishing necessary controls.
Communicate Effectively
Prepare to explain AI system mechanics clearly and maintain thorough documentation.
Industry-Specific AI Regulations
Understanding regulations in specific sectors is crucial:
Financial Services
Regulators focus on AI’s use in financial services, emphasizing fairness and transparency in decision-making.
Automotive
AI compliance in the automotive industry is lagging behind advancements in automated driving systems, with efforts to establish safety frameworks ongoing.
Healthcare
The FDA’s action plan details goals for managing AI-powered medical devices, promoting safety and reducing algorithmic bias.
Insurance
Proposed regulations aim to mitigate conflicts of interest when using AI in investor interactions.
As AI regulations continue to develop, companies must stay informed and adapt to ensure compliance with evolving laws and standards. By partnering with AI consultancy providers, businesses can navigate the complexities of regulatory requirements and prepare for a compliant future.
FAQs
Q. What is the importance of AI compliance?
A. AI compliance ensures ethical use, protects user privacy, and fosters trust in AI systems while mitigating legal risks.
Q. How to ensure AI compliance in software development?
A. Adhere to relevant data protection regulations, conduct regular audits, and incorporate ethical practices throughout the development process.
Q. How to regulate AI?
A. A multifaceted approach involving collaboration between governments, industry, and academia is essential for effective AI regulation.
Q. Why does every business need to pay attention to AI compliance?
A. Compliance is vital for ethical considerations, risk management, and maintaining competitive viability.
Q. How should the government approach AI and regulatory compliance?
A. Regulations should be efficient, neutral, proportional, collegial, and flexible to adapt to the rapidly changing AI landscape.
