Yes. ASIC expects AFS licensees to maintain effective compliance monitoring and AI can be used to support that objective. AI may assist with surveillance, risk detection, file reviews, breach identification and data analysis, but human oversight remains required. Compliance accountability stays with the licensee and AI-generated findings should be reviewed before action is taken.
Expanded Answer
AI can be a valuable compliance tool when used within an appropriate governance framework. ASIC’s regulatory focus is on the effectiveness of compliance systems and controls rather than the specific technology used. AI can assist in identifying patterns, anomalies, conduct risks and potential compliance breaches across large volumes of data more efficiently than traditional manual processes.
In practice, AI may be used to monitor adviser conduct, review advice files, analyse communications, detect unusual transactions, identify potential reportable situations and support risk assessments. These tools can improve coverage and consistency, particularly where large datasets or complex monitoring activities are involved. However, AI outputs should be treated as indicators requiring further investigation rather than definitive compliance conclusions.
Key obligations:
- Applies when AI is used within compliance, surveillance or risk management functions.
- Human review remains required before compliance decisions are made.
- Compliance accountability remains with the AFS licensee.
- AI monitoring systems should be tested, validated and regularly reviewed for accuracy and effectiveness.
Regulatory scrutiny increases where firms rely heavily on automated monitoring without demonstrating appropriate governance, validation and oversight. Effective compliance frameworks combine technology with experienced compliance professionals who can interpret results and exercise judgement. For additional guidance, see AI-driven compliance: transforming risk management and regulatory oversight and The hidden risks of AI: ASIC’s review of licensees’ embrace of artificial intelligence.
Why it matters
Effective AI-assisted monitoring can improve risk detection, reduce manual effort and identify emerging issues earlier. Poorly governed systems can create false confidence, missed breaches and inadequate supervision, increasing regulatory and operational risk.
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Practical guidance
- Validate AI monitoring tools before deploying them in compliance processes.
- Review and investigate AI-generated alerts before making compliance decisions.
- Track performance metrics and regularly test monitoring outcomes against actual risks.
Further reading
AI-driven compliance: transforming risk management and regulatory oversight
From samples to signals: a smarter approach to AFSL surveillance