US regulators step up AI controls for banks – Sharecafe

U.S. banking regulators are tightening their scrutiny over how lenders use artificial intelligence as rapidly evolving technology sweeps the financial industry. This increased oversight by agencies such as the Office of the Comptroller of the Currency (OCC) and the Federal Reserve is due to the accelerated adoption of AI in complex functions such as lending and regulatory oversight, exposing the sector to increased cybersecurity and fraud risks. Regulators are primarily focused on deepening their understanding of the use of AI.

During routine bank audits, regulators now routinely press companies on various critical aspects of their AI use. This includes planning the use of AI technology in higher risk areas such as lending, know-your-customer checks and sanctions checking. Detailed questions address data access, governance controls, protection of customer data, and the presence of “kill switches” on the system…