AML Regulatory Compliance & Legal Framework 2

Question 1

Under the EU AI Act, which risk category requires mandatory conformity assessments before deployment?

Accepted Answer

High risk

Answer

High-risk AI systems under the EU AI Act must undergo mandatory conformity assessments and meet strict requirements before market deployment.

Question 2

Which US federal agency primarily oversees algorithmic accountability in consumer financial products?

Accepted Answer

CFPB

Answer

The Consumer Financial Protection Bureau (CFPB) has primary authority over algorithmic models used in consumer lending, credit scoring, and financial products.

Question 3

The principle of 'legitimate interest' under GDPR is relevant to ML systems primarily because it:

Accepted Answer

Provides a lawful basis for processing personal data when outweighed by subject rights

Answer

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.

Question 4

A company deploys an ML model that denies loans to applicants disproportionately from a protected class. Under US law, this most directly implicates:

Accepted Answer

Equal Credit Opportunity Act (ECOA)

Answer

ECOA prohibits credit discrimination on the basis of protected characteristics, and disparate impact from ML models can trigger ECOA violations.

Question 5

Model documentation requirements under the Federal Reserve's SR 11-7 guidance apply to:

Accepted Answer

Statistical models used for risk management decisions

Answer

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.

(AML) Advanced Machine Learning Certification Practice Test

(AML) Advanced Machine Learning Certification Practice Test

AML Regulatory Compliance & Legal Framework 2