In February 2024, we published an alert concerning the increase in regulatory attention to "AI washing," or making unfounded claims regarding artificial intelligence ("AI") capabilities. Notably, on February 14, 2024, Department of Justice ("DOJ") Deputy Attorney General Lisa Monaco warned that "[g]oing forward, where Department of Justice prosecutors can seek stiffer sentences for offenses made significantly more dangerous by the misuse of AI, they will."1
In her recent keynote remarks at the American Bar Association's 39th National Institute on White Collar Crime, Deputy Attorney General Monaco doubled down on these statements, noting that where AI is deliberately misused to make a crime "significantly more serious," prosecutors will seek stiffer sentences for "individual and corporate defendants alike."2 She compared the deliberate and serious misuse of AI to the use of firearms and other dangerous weapons, noting that both types of misconduct present serious risks to victims and to the public at large.
Deputy Attorney General Monaco also announced that, moving forward, DOJ prosecutors will be evaluating a company's ability to manage AI-related risks in assessing its overall compliance efforts. To this end, she stated that the Department's Criminal Division will be incorporating an assessment of disruptive technology risks, including risks associated with AI, into its guidance on Evaluation of Corporate Compliance Programs.
Finally, Deputy Attorney General Monaco spoke about a recently announced initiative called "Justice AI," which seeks to bring together stakeholders across industry, academia, law enforcement and civil society to address the impacts of AI. She indicated that the DOJ would use these conversations to inform its AI policy, including regarding corporate compliance issues.
The DOJ's message is clear: "Fraud using AI is still fraud. Price fixing using AI is still price fixing. And manipulating markets using AI is still market manipulation." It is also clear, however, that the DOJ is still developing its understanding of how AI can be misused, and how the misuse of AI can be prosecuted and regulated.
The Securities and Exchange Commission ("SEC") is also in the early stages of exploring these issues. At the 39th National Institute on White Collar Crime, SEC Enforcement Director Gurbir Grewal identified five areas of focus related to AI: AI washing; the use of AI for fraud or market manipulation; the potential for AI to prioritize advisors' interests over those of their clients; the risk of advisors relying on AI models that produce "hallucinations" or mistakes; and the systemic risks arising from a market involving many people making investment decisions based on information sourced from a few large AI players.
To avoid enforcement and regulatory scrutiny, companies should ensure that their corporate compliance programs provide an avenue for assessing AI-related risks and that they are accurately representing the role of AI in their businesses. White & Case's Global Technology Industry Group draws from various disciplines and a broad range of expertise to help clients address these issues. Should enforcement and regulatory queries arise, the Firm's White Collar/Investigations Practice has practical and current experience managing such inquiries on clients' uses of AI.
1 Office of Public Affairs | Deputy Attorney General Lisa O. Monaco Delivers Remarks at the University of Oxford on the Promise and Peril of AI | United States Department of Justice
2 Office of Public Affairs | Deputy Attorney General Lisa Monaco Delivers Keynote Remarks at the American Bar Association's 39th National Institute on White Collar Crime | United States Department of Justice
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