Regulatory Bodies Intensify AI Audits

Six people familiar with the matter said that banking regulators are intensifying efforts to contain the growing risks associated with artificial intelligence, with some pointing to the possibility of cyberattacks on banks or rogue agents undermining global financial stability. The sources added that the regulatory oversight, details of which are being revealed here for the first time, reflects a growing recognition that advances in sophisticated AI may require substantial investments in cyberattack recovery capabilities, greater scrutiny of reliance on external technology providers, and, in some jurisdictions, more formal regulatory guidance. Two of these individuals told Reuters that three major U.S. regulatory bodies, including the Federal Reserve (the U.S. central bank), are asking banks about their use of advanced AI models, adding to previous supervisory inquiries. Three of them said the questions include whether banks are using technology developed in China, employing AI agents in cyber defense, and whether they can control systems that are becoming increasingly autonomous. Three people familiar with the thinking in Europe said that European regulators, including the Bank of England and the European Central Bank, are pressuring banks to improve their recovery plans, fearing that rapid advances in AI could cause serious damage and disruption to financial markets sooner than previously feared.