Artificial Intelligence, Data Privacy, and Financial Regulation: Emerging Legal Perspectives

Abstract

Artificial Intelligence (AI) has significantly transformed financial systems by enhancing regulatory compliance, fraud detection, risk management, and automated decision-making. However, the increasing use of AI in financial services has introduced complex legal challenges concerning data privacy, transparency, accountability, and algorithmic fairness. This study examines the emerging legal relationship among artificial intelligence, data privacy, and financial regulation by proposing an integrated analytical framework that combines AI-driven legal analytics, privacy governance, explainable artificial intelligence, and regulatory compliance assessment. The framework evaluates how AI technologies can support effective financial supervision while ensuring compliance with modern data protection principles. The findings indicate that AI has considerable potential to improve regulatory efficiency, enhance legal decision-making, and strengthen financial governance when supported by transparent, explainable, and privacy-preserving mechanisms. The study concludes that future financial regulatory systems should adopt comprehensive legal frameworks that balance technological innovation with the protection of individual rights, ethical AI governance, and sustainable regulatory development.