06.12.26

US Bank Regulators Ramp Up Scrutiny of AI Use at Financial Companies

by: Nupur Anand

U.S. banking regulators are increasing scrutiny of how financial institutions use AI, focusing on areas such as lending, customer verification, sanctions screening, cybersecurity, data privacy and reliance on third-party vendors. During routine examinations, the Federal Reserve and Office of the Comptroller of the Currency are asking banks to document AI use, governance frameworks, human oversight, emergency “kill switches,” vendor management practices and contingency plans. Rather than creating new AI-specific regulations, regulators are currently relying on existing risk-management, consumer-protection and third-party oversight frameworks while gathering information on industry practices. A key concern is ensuring AI systems do not access unauthorized data or operate beyond intended limits. Regulators are also assessing emerging cybersecurity risks posed by increasingly powerful AI models.

Read the full article on Reuters