Legal Regulation of Artificial Intelligence in the Banking Sector: A Comparative Study between the European Union AI Act and the Algerian Legal Framework

Abstract

Artificial intelligence (AI) has emerged as a transformative force in the banking sector, fundamentally reshaping financial services through automated credit assessment, fraud detection, risk management, regulatory compliance, and customer relationship management. While these technologies enhance operational efficiency and support data-driven decision-making, they also generate significant legal and regulatory challenges concerning transparency, accountability, human oversight, data protection, and algorithmic governance.

This article examines the legal regulation of AI in the banking sector through a comparative analysis of the European Union Artificial Intelligence Act (AI Act) and the Algerian legal framework. It evaluates the extent to which the current Algerian banking legislation is capable of addressing the legal implications arising from AI-driven banking services and identifies the principal legislative gaps that may hinder the safe and trustworthy deployment of AI technologies within financial institutions.

The study adopts an analytical approach to examine the applicable legal rules, a comparative method to assess similarities and differences between the European and Algerian regulatory models, and a prospective approach to formulate legislative recommendations. The findings demonstrate that the European regulatory framework is founded upon a comprehensive risk-based model integrating transparency, human oversight, legal accountability, governance, and data protection into a coherent regulatory architecture. By contrast, although Algerian legislation provides a general legal basis through Monetary and Banking Law No. 23-09 and Personal Data Protection Law No. 18-07, it does not establish a specialised legal framework governing AI systems in banking.

The article proposes a gradual legislative model centred on amending the Algerian Monetary and Banking Law while empowering the Bank of Algeria to adopt specialised regulatory instruments governing AI systems according to their level of risk. Such a model seeks to reconcile technological innovation with customer protection, legal certainty, and financial stability while remaining consistent with the institutional and legal characteristics of the Algerian banking system.