While we’ve all heard about the pitfalls of AI, there’s one thing that hasn’t been mentioned in the media too much – its potential use for crime. Well, according to the U.S. Treasury, that potential is currently being realized on a widespread level. Let’s take a look at what they said.
Treasury Sounds Alarm
The U.S. Treasury has warned that AI is being used for nefarious means only a year after its popularity began skyrocketing with the release of ChatGPT.
Fraudsters’ New Weapon
According to the Treasury, AI is being used by fraudsters to scam people and businesses, carry out attacks on financial firms, mine for people’s data, and is also being used to impersonate people.
Cybersecurity Under Siege
“Artificial intelligence is redefining cybersecurity and fraud in the financial services sector,” Under Secretary for Domestic Finance Nellie Liang stated.
Treasury’s Report on AI Cybersecurity Risks
In a newly published report commissioned by a Presidential Executive Order, the Treasury goes into depth on “Managing Artificial Intelligence (AI)-Specific Cybersecurity Risks in the Financial Services Sector.”
AI Redefining Financial Fraud
The Treasury’s Office of Cybersecurity and Critical Infrastructure Protection led the effort to create this report – a team responsible for managing risks in the financial industry.
Unveiling the Threat
The report talks about how AI is changing the game for cybersecurity and fraud prevention in finance, presenting both opportunities and challenges. It highlights several important areas that need attention:
#1. Bridging the Gap
There’s a gap between big and small financial institutions when it comes to using AI. Big ones can develop their own AI systems, but smaller ones struggle because they don’t have enough data.
#2. Data Dearth
Sharing data is crucial for fighting fraud, but not enough of it gets shared among financial firms.
#3. Regulatory Realities
Regulators need to work together to keep up with AI’s rapid changes.
#4. Updating AI Risk Management for Finance
The National Institute of Standards and Technology (NIST) should update its AI Risk Management Framework to fit the financial sector better.
#5. Transparency Matters
Financial companies should be careful about where their AI data comes from and how it’s used. They want developers to put “nutrition labels” on AI systems so people know what’s in them.
#6. Decoding the Black Box
Some AI systems are like black boxes – impenetrable, with systems and inputs that are hidden from the user – making it hard to understand how they work. We need to find ways to explain them better.
#6. Talent Shortage
There’s a shortage of people who know how to work with AI in the financial industry. We need more training programs to fill this gap.
#7. Common Ground
Developers need to agree on a common AI vocabulary to avoid confusion and provide consistency across the AI sector.
#8. Combatting Fraud With AI
We need to figure out how to handle digital identity systems better to stop fraud and improve security.
#9. Global Cooperation
Different countries need to work together on AI rules for finance.
Biden’s Commitment
Liang explained in the report that “The Biden administration is committed to working with financial institutions to utilize emerging technologies while safeguarding against threats to operational resiliency and financial stability.”
Collaborative Efforts
The Treasury talked to many people in finance and tech to create this report, which is full of ideas for dealing with AI in finance.
AI’s Threat to Identity Verification
The report discusses the impact of new AI tech, which has made it possible for fraudsters to impersonate someone’s voice or pretend to be them on video with startlingly accurate results.
This was a “chief concern” for many finance firms, as they regularly use photos and audio to verify customers’ identities.
Identity Theft Rampant
The report even highlights that “Voice, video, or other identity-verification mechanisms like measuring keystroke dynamics are all susceptible to AI-enabled impersonation” and warns of the potential for AI to create fake identities from mined user data, which can be used “to conduct a range of financial activities, like opening accounts and lines of credit at financial institutions.”
The Hong Kong Heist
AI was recently used to steal $25 million in Hong Kong after a fraudster posed as a company’s chief financial officer in a video conference call.
AI on Trial
These sorts of scams are becoming more and more common as AI infiltrates the mainstream.
Election Spotlight
It will take a lot of work and regulation by Biden’s administration to stem these AI scams, an issue that could become a focal point in the run-up to the 2024 Presidential elections.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
