UPDATE — AUGUST 2025: FINRA’s AI guidance, issued through Regulatory Notice 24-09 in June 2024, remains authoritative and fully in effect. It continues to serve as the central regulatory reference for AI and generative AI use in financial services. The guidance reinforces that all existing FINRA rules—especially those governing supervision (Rule 3110) and communications (Rule 2210)—apply equally to AI-generated content under a technology-neutral framework. As of mid-2025, FINRA has reiterated these obligations in its annual oversight reports and encourages firms to proactively engage with Risk Monitoring Analysts to manage evolving AI-related compliance risks. Firms remain accountable for comprehensive supervision, model risk management, and data integrity whether AI is developed in-house or sourced from third-party vendors.
ORIGINAL NEWS STORY:
FINRA Issues Guidance on AI Use in Financial Services, Emphasizing Governance and Compliance
The Financial Industry Regulatory Authority (FINRA) has released a comprehensive guidance document addressing the use of generative artificial intelligence (GenAI) and large language models (LLMs) within the financial services industry. The document underscores the importance of regulatory compliance and the need for robust AI governance to safeguard investor interests and ensure market integrity.
As AI technologies rapidly evolve, their integration into financial services offers promising opportunities for enhancing products, services, and operational efficiencies. However, these advancements also bring significant regulatory challenges. FINRA’s new guidance, published on June 27, emphasizes that existing regulatory obligations apply to the use of AI tools just as they do to other technologies. This reiteration aims to maintain a technology-neutral regulatory framework, ensuring that AI implementations comply with federal securities laws and regulations.
Critical Areas for Compliance
Technology Neutrality
FINRA reaffirmed that its rules are technology-neutral. The same standards that apply to traditional tools also apply to AI. Firms must therefore comply with rules on anti-money laundering, public communications, data protection, cybersecurity, model risk management, and vendor oversight.
Regulatory Obligations
Firms must evaluate AI tools before using them. This means addressing data privacy, accuracy, bias, and intellectual property issues. In addition, companies must build strong supervisory systems that include governance, risk management, and safeguards for data integrity.
Rigorous Evaluations
FINRA expects member firms to test AI tools thoroughly before deployment. Evaluations must consider how the technology will be used and ensure compliance with all FINRA rules. Use cases vary, so firms may need to seek interpretive guidance directly from FINRA.
Continuous Engagement
FINRA urges firms to maintain open dialogue with their Risk Monitoring Analysts. Regular engagement helps firms manage uncertainty and navigate evolving compliance requirements. Moreover, FINRA invites feedback on how its rules could adapt to new technologies while still protecting investors.
Conclusion
FINRA’s guidance acknowledges the rapid pace of AI development. It calls for collaboration among regulators, firms, policymakers, and stakeholders to address compliance challenges. This approach allows innovation to move forward while ensuring fairness and investor protection.
Need Help?
Keeping track of the everchanging AI landscape can be tough, especially if you have questions and concerns about how it will impact you. Don’t hesitate to reach out to BABL AI. Their Audit Experts are ready to provide valuable assistance.
Photo by Rafapress on depositphotos.com – June 28, 2022, Brazil. In this photo illustration, a silhouetted woman holds a smartphone with the Financial Industry Regulatory Authority (FINRA) logo displayed on the screen
