Scale, speed and realism of attacks increasing with wider availability of generative AI
The widespread availability of generative AI is increasing “the scale, speed and realism of attacks”, it said.
New technology, which is often cheap and widely available, combined with the shift to digital financial products, is making it easier for criminals to conduct illicit activity and perpetrate fraud, according to the Central Bank’s Regulatory & Supervisory Outlook.
By early last year, AI?supported phishing reportedly made up more than 80pc of such activity globally, even though that technology was still relatively new, it said.
AI is not necessarily bad and can also assist in the fight against financial crime, the report said.
But the downsides are significant, it added.
Protecting the integrity of the financial system and consumers from financial crime needs to be a priority
The wider report sets out the bank’s assessment of the plethora of risks facing the financial sector, as well as its own planned responses, ranging from IT resilience and outsourcing to potential economic shocks and fracturing global business ties.
In relation to scams and frauds, the regulator said its response will include a programme to assess fraud controls at regulated firms, such as banks and payment providers, and their incident responses and treatment of customers.
“Protecting the integrity of the financial system and consumers from financial crime needs to be a priority for all firms and agencies,” the report said.
Action to push social media platforms to remove scam ads and publicise threats is also cited as a priority.
The Central Bank has “trusted flagger” status under the EU’s Digital Services Act, which means online platforms have to prioritise complaints it raises over suspect material.
Specific products enabled by this new technology, such as crypto, elevate fraud and financial crime risks
However, the report indicated that the threat from scams and fraud is worsening, hand in hand with technological developments and adoption.
“Specific products enabled by this new technology, such as crypto[currency], elevate fraud and financial crime risks, and could, over time, increase financial stability risks as they become a more material and integral part of the financial system,” the report said.
Advanced AI tools offer potential to improve productivity, investment performance and risk management for financial firms. However, the risks of bias, misinformation, data loss and lack of transparency create vulnerabilities and require vigilance, it said.
“Advancing digitalisation and changing consumer expectations are reshaping the nature, form and delivery of financial products, creating both opportunities and challenges.
“Many of the more recent technological innovations, such as tokenisation and stablecoins, have the potential to reshape finance for the better through operational efficiencies and improved financial offerings.
“But they also entail risks that need to be managed and raise environmental concerns,” it said.
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