FCA boss to warn financial institutions of AI fraud risks

AI risks Image credit: FCA

The chief financial regulator will deliver a speech warning against the risks artificial intelligence (AI) poses to banks, investors and insurers.

Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), will deliver a speech today outlining the potential increase in fraud associated with the rise of AI tools.

The FCA chief will warn of an upcoming rise in “cyber fraud, cyberattacks and identity fraud” which will increase in “scale and sophistication and effectiveness”.

The rise in popularity and effectiveness of AI technology has prompted regulators to prepare for new dangers. Speaking at the Economist’s Transformation Agenda, Rathi will specify how these risks may apply to financial institutions.

“As AI is further adopted, the investment in fraud prevention and operational and cyber resilience will have to accelerate simultaneously,” Rathi will say.

“We will take a robust line on this – full support for beneficial innovation alongside proportionate protections.”

The FCA boss also warned that those in charge of these financial institutions will be “ultimately accountable for the activities of the firm” conducted by AI.

The government is currently developing its AI regulatory regime, having already delivered a white paper putting the responsibility in the hands of existing regulatory bodies.

Financial journalist Martin Lewis recently spoke out on how AI deepfakes could be used in financial fraud, after it was revealed that his image was falsely attached to an investment scam.