Abstract
The purpose of this dissertation is to analyse how artificial intelligence (AI) is affecting banking compliance in South Africa. It demonstrates how banks utilise AI for managing risk, detecting fraud, and preparing reports for regulatory bodies. Furthermore, the dissertation illustrates that the advantages of utilising AI in banking compliance such as improved speed, increased accuracy and greater efficiency are accompanied by several legal, ethical, and operational challenges that are inadequately addressed by existing regulations.
This research employs a desk-based research methodology. This involves the use of both primary and secondary data. The study further analyses the application of the Financial Sector Regulation Act, the Financial Intelligence Centre Act, the Protection of Personal Information Act, and the Electronic Communications and Transactions Act to AI-driven compliance systems. In addition, the dissertation assesses whether these acts provide sufficient guidance to enable banks and regulatory bodies to oversee automated decision-making, safeguard consumer rights and promote equitable treatment.
The dissertation considers the regulatory approaches employed by the European Union, the United States, Singapore, and international organisations regarding similar risks. The dissertation concludes that the existing regulatory frameworks in South Africa contain useful principles but lack the clarity and technical detail necessary to effectively regulate AI.
The dissertation suggests that regulatory reforms should focus on amending legislation, providing practical regulatory guidelines, increasing oversight capacity and developing sector-specific AI governance tools. The study further concludes that South Africa has the potential to realise numerous benefits from AI in banking compliance, but only through the collective efforts of policymakers, regulatory bodies and financial institutions working towards developing an effective regulatory framework supporting the responsible and transparent deployment of AI in banking Compliance.