Featured Product

    MAS Sets Out Recommendations on Use of Artificial Intelligence

    June 30, 2022

    The Monetary Authority of Singapore (MAS) published an information paper on the thematic review of selected financial institutions’ implementation of the Fairness Principles in their use of artificial intelligence and machine learning.

    The paper highlights observations from the review of the policies and governance frameworks of institutions to meet the Fairness objectives under the Fairness, Ethics, Accountability, and Transparency (FEAT) Principles and their implementation effectiveness in actual artificial intelligence and machine learning use cases. The paper also outlines the recommendations, good practices, and illustrative examples observed from the review. As per the recommendations, financial institutions should:

    • ensure that the frameworks to determine whether models are in scope for materiality and fairness assessments are sufficiently comprehensive, taking into consideration all relevant Artificial Intelligence and Data Analytics models.
    • consider whether models under the regulatory models have Artificial Intelligence and Data Analytics features and are subject to materiality and fairness assessments.
    • adopt frameworks for materiality that take into account a comprehensive range of factors and quantitative parameters to supplement qualitative, to facilitate more consistent and holistic assessments.
    • apply a calibrated approach when performing FEAT and fairness assessments based on the materiality of their models and ensure that fairness assessments should be substantiated and supported by adequate justifications.
    • consider specifying a list of protected attributes and their proxies, the use of which is subject to justifications and approvals, as a safeguard against discrimination.
    • review models for fairness on a regular basis, especially those with high materiality.
    • base their fairness objectives and measures by comparing across individuals and groups.
    • incorporate FEAT considerations during the model development life cycle and develop a roadmap to put existing models through the FEAT assessments.
    • set up appropriate structures and processes for an independent, or second line of defense function, to perform validations on the materiality and fairness assessments.
    • ensure that the units involved in assessing and validating models against the FEAT Principles are adequately resourced and have the necessary skillsets as they scale up their use of Artificial Intelligence and Data Analytics.

    The paper concludes that the use of Artificial Intelligence and Data Analytics by financial institutions must be accompanied by good governance and risk management as well as sustainable strategies. In line with a risk-based approach, financial institutions that use or have plans to use Artificial Intelligence and Data Analytics models extensively in decision-making should take into account the aforementioned recommendations to incorporate the FEAT Principles in their Artificial Intelligence and Data Analytics policies and workflows. Going forward, MAS will continue to work with the industry to promote the responsible use of Artificial Intelligence and Data Analytics through the effective implementation of the FEAT Principles.

    Keywords: Asia Pacific, Singapore, Banking, Insurance, Securities, Fintech, Artificial Intelligence, Machine Learning, Predictive Analytics, Lending, Regtech, AIDA, Governance, FEAT Principles, MAS

    Related Articles

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582