the policy discussion should start by considering whether the existing regulations already adequately address the risk, or whether they need to be adapted to the addition of AI.” 12 A recent report by the U.S. Department of the Treasury reaches a similar conclusion with regard to financial services.
13 With respect to banking services, a few generally applicable laws, regulations, guidance, and supervisory approaches appear particularly relevant to the use of AI tools. First, the Federal Reserve’s “Guidance on Model Risk Management” (SR Letter 11-7) highlights the importance to safety and soundness of embedding critical analysis throughout the development, implementation, and use of models, which include complex algorithms like AI.