Davis Polk partner Gabe Rosenberg was featured in BizTech Magazine discussing the role of AI in financial compliance.

Speaking about the significant regulatory compliance challenges financial services institutions face, Gabe noted, “The previous administration put the brakes on from a legal and regulatory standpoint for new technologies in the financial sector — digital assets and crypto, for example. If and when the restrictions ease somewhat, and those technologies make their way into the more traditional financial sector, compliance departments and professionals are going to need to develop a regime around these new technologies, because they’re new.”

When asked why many firms are cautious about AI use in compliance, he said, “Anything that has the label on it of ‘AI’ for a large traditional financial institution is going to have scrutiny. If you instead call this something like ‘advanced new compliance tool’ and didn’t use the word ‘AI,’ I think people might think about it slightly differently. I think we all know that AI is still a work in progress and will continue to be a work in progress. I think compliance is a great place to start with the use of AI because you don’t have to rely solely on the AI. I see less reluctance when the idea is to add AI to a toolkit, with the rest of the toolkit remaining intact.”

Gabe noted that a consideration for the implementation of AI for compliance is false positives. “People could start using these AI programs, and they might just throw out a bunch of false positives. That’s a potential pitfall,” he said. “That takes a lot of resources away from things that could be done better, but it also might lead people to think that future iterations of AI are useless. They get sort of sour on AI. And that’s not a good thing for anyone.”

“What Is AI’s Role in Financial Compliance?,” BizTech Magazine (August 13, 2025)

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