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Taiwan: FSC releases Guidelines for the use of AI in the financial industry

On June 20, 2024, the Financial Supervisory Commission (FSC) announced that it had released the Guidelines for the Use of Artificial Intelligence (AI) in the Financial Industry. The FSC clarified that the Guidelines may be used by the financial industry to establish self-regulatory norms.

The FSC outlined that it has adjusted the Guidelines following a consultation procedure launched on December 28, 2023, and the final version now includes:

  • a preface outlining that the financial institutions can rely on the risks involved in the specific usage scenarios of the AI ​​​​system and establish appropriate risk mitigation mechanisms and implementation methods, including adopting more cost-effective methods; and
  • general provisions on:
    • the supervision and management of third-party operators, in particular regarding the division of responsibilities for risk monitoring through contracts and other means and measures that financial institutions should adopt when entrusting third-party operators to introduce AI system-related operations;
    • the implementation of core principles by financial institutions when using AI systems after comprehensively considering various risk assessment factors;
    • the establishment of a review and evaluation mechanism based on financial institutions' own professionalism and resource levels, including review by an independent third party with AI expertise;
    • ensuring fairness and human controllability of the generative AI output, including when financial institutions use third-party operations and cannot ensure the fairness of data;
    • the adoption of the data minimization principle in line with the General Data Protection Regulation (GDPR) to avoid collecting excessive or unnecessary information;
    • ensuring the explainability of the operation of the AI ​​system, however, limiting it to having financial institutions being able to clearly explain how the AI systems that they have developed, use, or commissioned, operate, and the logic behind their decision-making processes; and
    • ensuring transparency and market trust in the AI ​​systems of financial institutions, including by having financial institutions publish reports and technical documents or disclose relevant information on their websites.

You can read the press release here and the Guidelines here, both only available in Chinese.