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<h1>Regulation 16C mandates AI-using entities to ensure data privacy, security, and accuracy, facing penalties for non-compliance.</h1> Regulation 16C of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008, mandates that any regulated entity using artificial intelligence (AI) and machine learning tools, whether self-developed or sourced from third parties, is solely responsible for ensuring the privacy, security, and integrity of investors' data. These entities must also ensure the accuracy of outputs from such tools and comply with relevant laws. In case of non-compliance, SEBI may impose penalties as deemed appropriate. The regulation defines AI tools as applications or systems used for investment, trading, compliance, or business purposes.