FCA boss warns against scammers using AI for financial fraud

investmentweek.co.uk:

Nikhil Rathi, CEO of the FCA

Speaking at The Economist's Transformation Agenda event this morning (12 July), Nikhil Rathi said that risks of «cyber fraud, cyber-attacks and identity fraud [are] increasing in scale and sophistication and effectiveness» as AI has boomed and become more widespread.

He continued: «Depending on who you speak to, AI could either lead to the destruction of civilisation, or the cure for cancer or both. It could either displace today's jobs or enable an explosion in future productivity.

»The truth probably embraces both scenarios."

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While AI technology has certainly helped to improve productivity and customer support across industries, it has also raised concerns over the ease in which users can create fake language, audio and video.

Rathi warned this could increase risks for financial firms in particular, and that «investment in fraud prevention and operational and cyber resilience will have to accelerate simultaneously».

«We will take a robust line on this — full support for beneficial innovation alongside proportionate protections,» he added.

‘Deep fake' scams have already been in circulation, the most recent instance being a video purporting to be personal finance campaigner, Martin Lewis. In response, Lewis called for regulators to force big technology companies to take action to stop similar scams.

Similarly, generative AI can affect markets in ways that have never been seen before — for example, in May, a suspected AI-generated image depicting the Pentagon in the aftermath of an explosion spread across social media, jolting global financial markets.

«The use of AI can both benefit markets and can also cause imbalances