reuters.com - Banking watchdogs ramp up AI scrutiny stability fears mount sources say

Three top regulators in the United States, including the Federal Reserve, are quizzing banks about their use of advanced artificial intelligence models, two of the people told Reuters, which adds to prior scrutiny.

Questions include whether they deploy Chinese-developed technology, use AI agents in cyber defence and can control increasingly autonomous systems, three of the people said.
In Europe, supervisors including the Bank of England and the European Central Bank are pressing banks to improve recovery plans, concerned that rapid advances in AI could ​cause serious harm and disruption in financial markets sooner than previously feared, three people with knowledge of their thinking said.

A senior executive at a large European bank said they too are worried about potentially major damage to ​banking and financial markets within six months.

Banking regulators are stepping up efforts to contain growing AI risks, six people familiar with the matter said, with some pointing to the potential for cyberattacks on banks or rogue agents undermining global ​financial stability.

The regulatory scrutiny, fresh details of which are reported here for the first time, reflects growing recognition that advances in frontier AI may require costly investments in cyber recovery, greater attention to ‌dependencies on external technology providers and in some jurisdictions more formal regulatory guidance, sources said.

US cybersecurity company CrowdStrike said this month a person in China likely used a Chinese-developed AI agent and Anthropic's Claude Code in a hack on South Korean banks. Rogue AI agents ​developed by OpenAI were meanwhile involved in a breach of AI platform Hugging Face, Reuters reported.

Anthropic researchers have warned that increasingly powerful AI systems could eventually escape human control and even pose an existential threat, prompting calls for stricter regulation.
The International Monetary Fund warned on ​Tuesday against "complacency" in global financial markets, citing various risks including the potential for a cyberattack. The IMF said a major attack affecting a critical service or financial institution could undermine confidence, and it called on policymakers to boost cybersecurity capacity.
Banks are competing to adopt agentic AI, which can accomplish tasks with minimal human supervision, while also grappling with the challenges of new models including IT weaknesses flagged by Anthropic's Mythos tool.

"The adoption of AI is often outpacing the ability to put the controls in place," said Michael Woodbridge, London-based cybersecurity partner at Grant Thornton.

Jeff