As vehicles transition toward higher levels of automation, Driver Monitoring Systems (DMS) have become essential for ensuring human oversight, safety, and regulatory compliance in a vehicle. These systems rely on multimodal sensing and AI-driven inference to assess driver attention, cognitive state, and readiness to take control. While technologically promising, their deployment introduces a complex set of ethical and legal challenges - ranging from privacy and consent to data ownership and algorithmic fairness. While overarching frameworks such as the GDPR, EU AI Act, and IEEE standards offer important guidance, they lack the specificity required for addressing the unique risks posed by in-cabin sensing technologies. This paper adopts a review-to-design perspective, critically examining existing regulatory instruments and ethical frameworks -- such as the GDPR, the EU AI Act, and IEEE guidelines -- and identifying gaps in their applicability to the distinctive risks posed by multimodal, AI-enabled in-cabin monitoring. Building on this review, we propose a modular ethical design framework tailored specifically to Driver Monitoring Systems. The framework translates high-level principles into actionable design and deployment guidance, including user-configurable consent mechanisms, fairness-aware model development, transparency and explainability tools, and safeguards for driver emotional well-being. Finally, the paper outlines a risk analysis and failure mitigation strategy, emphasizing proactive incident response and accountability mechanisms tailored to the DMS context. Together, these contributions aim to inform the development of transparent, trustworthy, and human-centered driver monitoring systems for next-generation autonomous vehicles.