Although AI is a helpful tool for the evolving business environment, its uncontrolled and fast integration into business processes can bring legal and ethical challenges. This research paper delves into the legal and ethical considerations essential for effectively regulating AI in business environments. As AI systems increasingly influence decision-making processes and operational efficiencies, the need for comprehensive and forward-thinking regulation becomes imperative. Thus, in the aspects of ethics, algorithms are utilized to protect rights or prohibit discrimination and ensure the openness of AI’s decisions. This paper examines key legal issues such as data privacy, intellectual property rights, and liability. For example, while the General Data Protection Regulation (GDPR) provides a framework for data protection, it remains unclear how these provisions apply to AI's sophisticated data handling and automated decision-making processes.. Ethical considerations further complicate the regulatory landscape. AI systems can inadvertently perpetuate biases present in their training data, leading to discriminatory practices and fairness concerns. This paper explores the ethical implications of such biases and the need for transparency in AI algorithms to ensure that they operate in a manner consistent with societal values. To address these challenges, the paper proposes a regulatory approach. It advocates for the modernization of existing legal frameworks to better encompass AI...