AMF Issues Statements on Leverage Ratio, AI, and Credit Assessment

AMF also published a report sets out 10 recommendations to promote the responsible development and use of artificial intelligence. Three of these recommendations are for AMF while the the other seven are meant for the industry. These recommendations are supported by identified cases of artificial intelligence use and a detailed discussion of the risks and challenges involved in responsibly deploying artificial intelligence in finance. The recommendations also build on an interpretation of the principles of the Montreal Declaration within the specific context of financial sector activities. To assist the industry in meeting the challenge of the responsible use of artificial intelligence, AMF sought input from Marc-Antoine Dilhac, Associate Professor of Ethics and Political Philosophy at the Université de Montréal, and a key contributor to the work that led to the launch, in 2018, of the Montreal Declaration for a Responsible Development of Artificial Intelligence. In preparing the report released by AMF on recommendations for the responsible use of artificial intelligence in finance, Professor Dilhac and his research team considered not only the findings of experts in the field but also the concerns expressed by financial consumers in workshops held earlier this year.

Finally, AMF issued a statement announcing the expiration of a leverage ratio measure that was announced on April 09, 2020, wherein the concerned financial institutions were encouraged to temporarily exclude central bank reserves and sovereign-issued securities from their leverage ratio exposure measures. In the notice, AMF announced that this treatment would remain in effect until April 30, 2021. On November 06 2020, AMF announced an eight-month extension that allowed the financial institutions concerned to continue to exclude these exposures from their leverage ratios until December 31, 2021. Starting January 01, 2022, the concerned financial institutions will be required to include qualifying sovereign-issued securities in their leverage ratio exposure measures. The concerned financial institutions should continue to exclude central bank reserves from their leverage ratio exposure measures until otherwise notified. The concerned financial institutions include specific measures for trust companies, savings companies and other deposit institutions, credit unions not members of federation, member credit unions of a federation, and federations of credit unions.

Comment Due Date: January 28, 2022

Keywords: Americas, Canada, Banking, Credit Assessment, Credit Risk, Consumer Credit, Lending, Guidance, Leverage Ratio, Basel, Artificial Intelligence, Regtech, AMF