The 2nd Annual Charlotte E. Ray Lecture: Reflections on Diversity, Equity, and Effective Compliance

by Carolyn R Pautz, PhD

Photo courtesy of the author

On February 7th, Howard University School of Law, working with Steve Solow (Baker Botts), Preston Pugh (Crowell & Moring), and Ben Wilson (Beveridge and Diamond), hosted the 2nd Annual Charlotte E. Ray Lecture.  The program featured keynote speeches by Acting Assistant Attorney General Nicole Argentieri, former Attorney General Loretta Lynch, and panels with esteemed members of the Department of Justice, U.S. Attorney’s offices, and private practice.  The event provided an intimate look into the career trajectories of the speakers, the impact that the totality of their lives has played in their career and the influence of their personage on their respective communities.  Most pertinent to this piece, which focuses on diversity of compliance teams as a central factor in effective risk management, the event emphasized two broad themes: first, the importance of cultivating and carrying forward a sense of service and responsibility towards one’s community; and second, that in order to understand the difference one can make as they advance in the field of law, individuals need to ask themselves why their presence in a particular role matters uniquely.  Below, these themes are extrapolated to trace the relationship between diversity (including age, gender, race, and ethnicity), universal (or communal) norms, individual determination of what is “good” and “right”, and effective compliance programs. 

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Risk of AI Abuse by Corporate Insiders Presents Challenges for Compliance Departments

by Avi Gesser, Douglas Zolkind, Matt Kelly, Sarah Wolf, Scott J. Woods, and Karen Joo

Photos of authors

Top left to right: Avi Gesser, Douglas Zolkind, and Matt Kelly.
Bottom left to right: Sarah Wolf, Scott J. Woods, and Karen Joo. (Photos courtesy of Debevoise & Plimpton LLP).

We recently highlighted the need for companies to manage risks associated with the adoption of AI technology, including the malicious use of real-time deepfakes (i.e., AI-generated audio or video that impersonates a real person). In this article, we address three AI-related insider risks that warrant special attention by corporate compliance departments (i.e., insider deepfakes, barrier evasion, and model manipulation) and present possible ways to mitigate them.

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Navigating Compliance Risks in Robotics Applications within EU and US Legal Frameworks

by Wanda R. Lopuch Ph.D

New Technologies in the European Union and the United States

Photo of author

(Photo courtesy of author)

In the realm of technological innovation, robotics stands out due to its rapid growth and transformative potential. However, this potential brings myriad compliance risks, particularly when navigating the complex legal landscapes of the European Union (EU) and the United States (US). Below, I explore these risks, focusing on the divergent legal frameworks of the EU and the US and the challenges they pose to robotics application.

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Court Dismisses Most Claims in Authors’ Lawsuit Against OpenAI

by Angela Dunning, Arminda Bepko, and Jessica Graham

Photos of authors

From left to right: Angela Dunning, Arminda Bepko & Jessica Graham (photos courtesy of Cleary Gottlieb Steen & Hamilton LLP)

This week saw yet another California federal court dismiss copyright and related claims arising out of the training and output of a generative AI model in Tremblay v. OpenAI, Inc.,[1] a putative class action filed on behalf of a group of authors alleging that OpenAI infringed their copyrighted literary works by using them to train ChatGPT.[2] OpenAI moved to dismiss all claims against it, save the claim for direct copyright infringement, and the court largely sided with OpenAI.

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DOJ Announces Initiative to Combat AI-Assisted Crime

by Helen V. Cantwell, Andrew J. Ceresney, Avi Gesser, Andrew M. Levine, David A. O’Neil, Winston M. Paes, Jane Shvets, Bruce E. Yannett, and Douglas S. Zolkind

photos of the authors

Top (left to right): Helen V. Cantwell, Andrew J. Ceresney, Avi Gesser, Andrew M. Levine, and David A. O’Neil
Bottom (left to right): Winston M. Paes, Jane Shvets, Bruce E. Yannett, and Douglas S. Zolkind (photos courtesy of Debevoise & Plimpton LLP)

On February 14, 2024, Deputy Attorney General Lisa O. Monaco announced an initiative within the U.S. Department of Justice to ramp up the detection and prosecution of crimes perpetrated through artificial intelligence (AI) technology, including seeking harsher sentences for certain AI-assisted crimes. Monaco also announced a new effort to evaluate how the Department can best use AI internally to advance its mission while guarding against AI risks.

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New Impersonator Rule Gives FTC a Powerful Tool for Protecting Consumers and Businesses

by Lesley Fair

photo of the author

Lesley Fair (photo courtesy of the author)

To turn the old adage on its head, imitation is the insincerest form of falsity. After years of fighting back against scammers who impersonate government agencies and companies, the FTC proposed a Trade Regulation Rule on Impersonation of Government and Businesses. The Rule would allow the FTC to recover consumer redress from impersonators or to seek civil penalties against those who violate the Rule. After a painstaking process of considering public comments about the proposal, the FTC just published a Final Rule  – and we think it’s an important step in the fight against this form of fraud. Continue reading →

EU Rules Restricting the International Transfers of Non-Personal Data

by Kristof Van Quathem and Anna Oberschelp de Meneses

Photos of the authors

Kristof Van Quathem and Anna Oberschelp de Meneses (Photos courtesy of Covington & Burling LLP)

While the EU GDPR regulates the international transfer of personal data, several recently enacted EU laws regulate the international transfer of non-personal data, which is any data that is not “personal data” under the GDPR.  In other words, these new laws apply to data that does not relate to an identified or identifiable natural person, including anonymized data and data about industrial equipment, significantly expanding the types of data subject to international transfer restrictions.  Some of this legislation has been enacted recently, and other legislation on this topic is making its way through the legislative process but has yet to be adopted.  In this blog post, we outline the current and forthcoming EU legislation on the international transfer of non-personal data.

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FinCEN Proposes Highly Anticipated Investment Adviser AML/CFT Rule

by David Sewell, Timothy Clark, Stephanie Brown-Cripps, Nathaniel Balk, Nathalie Kupfer, and Rosie Jiang

Photos of authors

Top (left to right): David Sewell, Timothy Clark, and Stephanie Brown-Cripps
Bottom (left to right): Nathaniel Balk, Nathalie Kupfer, and Rosie Jiang
(Photos courtesy of Freshfields Bruckhaus Deringer LLP)

On February 13, 2024, the U.S Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a proposed rule to extend anti-money laundering (AML) and countering the financing of terrorism (CFT) compliance obligations to certain types of investment advisers operating in the United States (Proposed Rule).[1]  The agency simultaneously released a “2024 Investment Adviser Risk Assessment” (Risk Assessment), its first comprehensive effort to describe and measure “illicit finance threats involving investment advisers.”[2]

FinCEN’s release marks the latest development in a decades-old debate about whether investment advisers should be subject to the Bank Secrecy Act (BSA) and the attendant AML/CFT requirements that have long been applied to banks, broker-dealers, and other financial institutions.  If adopted in the current (or a similar) form, the Proposed Rule would bring this long-running debate to a close once and for all.  

Below, we briefly summarize the Proposed Rule, including its scope, requirements and potential implications, and highlight open questions and next steps.  

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How Not to Stand Out Like a Sore Thumb (Part 2): A Fresh Look at the “High Probability” Definition of Knowledge Applied to Export Controls and Sanctions Enforcement

by Brent Carlson and Michael Huneke

Photos of the authors.

From left to right: Brent Carlson and Michael Huneke (Photos courtesy of authors)

Media coverage concerning the widespread use of U.S. or Western microelectronics in recovered Russian- or Iranian-manufactured missiles and drones is putting pressure on governments, manufacturers, and exporters to consider ways to reduce more effectively the flows of such items to prohibited end-users. Even considering that many of the items are ubiquitous consumer electronics, the discovery of such items after mass-casualty events—including fatalities—on the front lines puts manufacturers and exporters on the front pages and in the crosshairs of U.S. regulators, prosecutors, media, and congressional committees. However the items arrived on the battlefield, their presence begs the questions of how and through whom they arrived. Continue reading →

EU to Adopt Sweeping Regulation of Artificial Intelligence

by Mehdi Ansari, Nader A. Mousavi, Juan Rodriguez, John L. Savva, Mark Schenkel, Presley L. Warner, Suzanne J. Marton, and Claire Seo-Young Song

Photos of the authors.

Top left to right: Mehdi Ansari, Nader A. Mousavi, Juan Rodriguez, and John L. Savva.
Bottom left to right: Mark Schenkel, Presley L. Warner, Suzanne J. Marton, and Claire Seo-Young Song. (Photos courtesy Sullivan & Cromwell LLP)

On February 2, 2024, the Committee of Permanent Representatives to the European Union (“COREPER”) approved the final text of a proposed Regulation laying down harmonised rules on artificial intelligence and amending certain other EU laws (“AI Act”).[1] The AI Act is expected to be passed into law in Q2 2024, once adopted by the European Parliament and EU Council of Ministers. Continue reading →