UK Financial Regulator Defends AI Contract with US Data Firm Amid Concerns

Britain's financial watchdog is defending its decision to award an artificial intelligence contract to American data company Palantir Technologies. Lawmakers questioned whether the firm would gain access to sensitive regulatory information and raised concerns about potential monopolization.

British financial regulators are standing by their decision to hire American data analytics company Palantir Technologies for an artificial intelligence project, despite facing tough questions from parliament members about data security and market dominance.

The Financial Conduct Authority awarded Palantir a 12-week deal to examine the agency’s internal information systems as part of efforts to fight financial crimes. Palantir Technologies was co-created by Peter Thiel, a billionaire investor who backed President Donald Trump early in his political career.

During a parliamentary Treasury committee hearing, lawmakers pressed FCA leadership, including CEO Nikhil Rathi, about whether the American company might gain access to confidential regulatory materials.

Conservative parliament member John Glen expressed additional worries about the company’s growing government presence. “The other concern is that they become ubiquitous across government,” Glen stated. “Is there anything that can be done to ensure they don’t become a monopoly?”

Palantir has already landed deals with Britain’s Defense Ministry and National Health Service, expanding its footprint across multiple government agencies.

Jessica Rusu, who serves as the FCA’s chief data, information and intelligence officer, explained that the selection process was conducted without revealing bidder identities until completion. She emphasized that Palantir would function solely as a data processor in this arrangement.

Rusu also noted that the U.S. CLOUD Act, which requires American tech companies to share data with U.S. officials under specific conditions, would not impact this particular FCA partnership.

The contract award appears contradictory to the FCA’s own previous warnings to financial institutions about the risks of depending too heavily on a limited number of major technology companies.

CEO Rathi recognized the broader strategic concerns about big tech’s role in government operations but defended the need for advanced tools to combat financial crimes effectively.

“We also want to be the most effective enforcer against financial crime and money laundering, and that requires us to use data intelligence more effectively and use best-in-class tools,” Rathi explained to lawmakers. “They won the procurement.”

A Palantir representative said the company takes pride in helping the FCA address financial crimes and stressed that it cannot profit from data processed during its British government work.

“The software can only be used – legally and contractually – to process data in strict accordance with the instructions of the customer,” the company spokesperson stated.

Palantir has seen significant revenue growth recently, particularly from U.S. government contracts. However, some of these agreements, including work with U.S. Immigration and Customs Enforcement, have sparked public backlash and forced CEO Alex Karp to publicly defend the company’s surveillance technologies.