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Dr. Nagarathna A. is an Associate Professor of Law at the National Law School of India University, Bengaluru. Her research interests include business law, cyber law, intellectual property rights, and technology regulation.
The growing utilisation of Artificial Intelligence (AI) in fraud detection and the prevention of financial crimes has profoundly altered the security features of contemporary financial systems. AI-driven fraud protection solutions provide instantaneous monitoring, predictive analytics, behavioural profiling, and automated decision-making functionalities that significantly enhance the precision of fraud detection. The implementation of AI in financial settings presents numerous ethical, legal, and regulatory dilemmas with privacy, transparency, accountability, fairness, bias, explainability, and compliance. Financial entities are required to guarantee that AI-based systems function within legal parameters, while also preserving public confidence and safeguarding personal rights. This chapter explores the ethical standards, regulatory obligations, governance structures, and evolving policy trends related to AI-driven fraud prevention systems within cloud-supported IoT and e-commerce environments.