Regulatory Compliance & Legal Framework Flashcards
7 cards from real AML practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulatory Compliance & Legal Framework flashcards as text
Under the EU AI Act, which risk category requires mandatory conformity assessments before deployment?
Answer: High risk
High-risk AI systems under the EU AI Act must undergo mandatory conformity assessments and meet strict requirements before market deployment.
Which US federal agency primarily oversees algorithmic accountability in consumer financial products?
Answer: CFPB
The Consumer Financial Protection Bureau (CFPB) has primary authority over algorithmic models used in consumer lending, credit scoring, and financial products.
The principle of 'legitimate interest' under GDPR is relevant to ML systems primarily because it:
Answer: Provides a lawful basis for processing personal data when outweighed by subject rights
Legitimate interest can serve as a lawful basis for processing personal data in ML pipelines, but only when the controller's interests are not overridden by data subjects' rights.
A company deploys an ML model that denies loans to applicants disproportionately from a protected class. Under US law, this most directly implicates:
Answer: Equal Credit Opportunity Act (ECOA)
ECOA prohibits credit discrimination on the basis of protected characteristics, and disparate impact from ML models can trigger ECOA violations.
Model documentation requirements under the Federal Reserve's SR 11-7 guidance apply to:
Answer: Statistical models used for risk management decisions
SR 11-7 defines a model broadly as a statistical, economic, or mathematical tool used for decision-making, requiring documentation and validation for all such tools in banking.
What does 'algorithmic impact assessment' (AIA) most closely resemble in existing regulatory practice?
Answer: Environmental impact assessment
AIA is modeled conceptually on environmental impact assessments, systematically evaluating potential harms of algorithmic systems before and during deployment.
Under the NIST AI Risk Management Framework (AI RMF), the 'Govern' function primarily addresses:
Answer: Organizational policies, accountability structures, and culture for AI risk
The Govern function in NIST AI RMF establishes organizational context, accountability, and culture that enable effective AI risk management across the other functions.