Justice, SEC May Look to AI for Corporate Compliance



The use of robots to prevent corporate crime is on the rise, and U.S. regulators may spur it even further.

Last year saw an acceleration in companies using artificial intelligence, or technologies involving human-like learning and reasoning ability, to monitor and flag actions that may violate U.S. laws on fraud or corruption, legal specialists said during a Bloomberg BNA global investigations and technology panel Jan. 24.

“That’s where we’re getting more to the cutting edge area,” Richard Sibery, the Americas fraud & investigations leader at EY, said. “It will be deployed, it is happening, it’s gonna continue down that line.”

For years, companies facing fraud or corruption investigations by the U.S. Department of Justice (DOJ) or Securities and Exchange Commission (SEC) have used AI technology, such as predictive coding, to sift through databases and flag documents, e-mail and transactions relevant to a case. As more corporations adopt AI technologies to predict or monitor employee behavior in real time, however, federal agencies will start expecting companies to use AI for compliance, panelists said.

It’s common for the DOJ and SEC to “ratchet up” expectations of companies’ use of new technologies such as data analytics once they’ve seen how such tools can improve efficiency and accuracy, Charles Duross, who heads Morrison & Foerster LLP’s global anti-corruption practice, said.

“I don’t think that’s probably best practice yet in terms of what DOJ or SEC expect, but I think it’s moving that way,” Duross said. “When they keep hearing companies that have that, they will start to have those expectations eventually.”

Agencies still expect humans at companies to analyze the nuances and complexities of an investigation or compliance activity, Farzaneh Paslar, general counsel for international transactions and compliance at Honeywell, said.

“Technology and these metrics are fantastic, but at the end of the day, you need the person who’s thoughtful and has good judgement,” Paslar said. “There’s nothing that beats flying into that location, kicking the tires and really understanding up close and personal what is going on.”