The head of Britain’s financial regulator will warn banks, investors and insurers will need to spend more to combat fraudsters who use artificial intelligence to commit fraud.
Nikhil Rathi, CEO of the Financial Conduct Authority (FCA), said artificial intelligence (AI) will “increase the scale, sophistication and effectiveness of cyber fraud, cyber attacks and identity theft fraud”. said in a speech in London on Wednesday.
The rapid progress in sophistication of generative AI by companies such as OpenAI and Midjourney has driven companies to explore ways to improve productivity using this technology.
Concerns have also been raised about the ease with which users can spoof their language, voice, and video with this technology.
Prime Minister Rishi Sunak wants the UK to be the center of AI regulation. The FCA’s AI work is part of a broader effort to consider how to regulate the large tech industry, which increasingly offers financial products.
Lati will warn that AI technology will increase risk, especially for financial firms. Senior executives at these companies will have “ultimate responsibility for the company’s activities,” including decisions made by AI, he said.
“As AI adoption increases, investment in fraud prevention and operations and cyber resilience will need to accelerate at the same time,” he said.
“In this regard, we have a strong policy of fully supporting beneficial innovation alongside adequate protection.”
There have already been cases of financial fraud using AI. Lati will point to a “deepfake” video in which prominent personal finance activist Martin Lewis allegedly sells speculative investments.
Lewis said the video was “terrifying” and called on regulators to force big tech companies to take action to stop similar scams.
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Lati believes AI will benefit the financial sector in improving financial models, improving customer support productivity, and enhancing fraud and money laundering detection.
But he said there are other potential risks to financial markets, such as increased volatility in price movements caused by automated trading robots and skewed data sets that relying on AI could be even more detrimental. right.
“The use of AI not only benefits markets, but if left unchecked can also create imbalances and risks that affect market integrity, price discovery, transparency and fairness,” he said. ” says.
