A report from the US Treasury has urged banks to enhance their risk management frameworks to effectively combat the growing threats posed by AI-driven fraudsters and cybercriminals.
The report stems from an executive order issued by President Joe Biden in 2023 and includes insights from interviews with 42 bank executives regarding their cybersecurity concerns. It highlights the rising anxiety among US banks regarding advancements in AI and the proliferation of deep fakes.
“The financial services sector is increasingly subject to costly cybersecurity threats and cyber-enabled frauds,” the report states. “As access to advanced tools becomes more widespread, it is likely that, at least initially, cyberthreat actors utilizing emerging AI tools will have the advantage by outpacing and outnumbering their targets.”
This report arrives in response to a significant uptick in consumer complaints, with the FBI’s Crime Complaint Center recording 880,000 reports of cyber crimes in 2023—a 22% increase from the previous year.
In addition to recommending updates to risk management frameworks to reflect AI advancements, the report emphasizes the importance of collaboration and data sharing among banks. It also calls for regulators to adopt a more “dynamic” approach to rule-making. Such changes would not only bolster defenses against fraud but also facilitate the timely deployment of AI tools that meet rigorous risk management standards.
“A balanced regulatory environment is crucial for empowering institutions to harness AI’s full potential in combating sophisticated threats, without being hindered by overly restrictive oversight,” the report asserts.
“Artificial intelligence is redefining cybersecurity and fraud in the financial services sector, and the Biden administration is committed to collaborating with financial institutions to leverage emerging technologies while ensuring operational resilience and financial stability,” stated Nellie Liang, undersecretary for domestic finance, in a statement accompanying the report.