A recent report released by the US Treasury has called on banking institutions to enhance their risk management controls/frameworks so that they can avoid being overwhelmed by AI-powered fraudsters and malicious cybercriminals.
The research report, which is reportedly the end result of an executive order issued by President Joe Biden last year, had interviewed 42 banking industry executives regarding their cybersecurity-related issues.
It determined that developments in Artificial Intelligence as well as the rise of deep fakes are an increasingly serious problem for US banking institutions. Notably, deep fakes are not simply a concern for the US, because recently, there had been a report about a Hong Kong worker being deceived by several sophisticated deep fakes. The individual had been convinced to approve and transfer large sums of money via this malicious deep fake scam. After a few days had passed, the individual realized that they had actually been tricked to carry out the fraudulent transactions.
As stated in the latest report from the US Treasury:
“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.”
The report comes after a concerning rise in consumer complaints.
The FBI’s Crime Complaint Center reportedly received over 800,000 calls from alleged victims of cyber crimes last year, which is a considerable 22% increase from the past year.
Along with requesting banking institutions to update their risk management controls to account for the latest developments in AI tech, the report also suggests additional collaboration between banks and for more responsible data sharing.
It also asks regulatory authorities to be a lot more dynamic in their rule-making process.
This approach could enhance existing defenses against bad actors and it may assist with supporting the fast deployment of AI-focused digital tools that comply with stringent risk management standards.
The report added:
“Such 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.”
Nellie Liang, undersecretary for domestic finance, remarked:
“Artificial intelligence is redefining cybersecurity and fraud in the financial services sector, and the Biden administration is committed to working with financial institutions to utilise emerging technologies while safeguarding against threats to operational resiliency and financial stability.”
