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The Office of the Comptroller of the Currency (OCC) released the framework on Wednesday, November 4. It is designed to help examiners evaluate how banks are implementing AI in their everyday business. The guidance advises that examiners should not treat artificial intelligence as a standalone risk category. Banks will not be required to develop separate risk standards for AI applications.
“Examiners should be focused on how a bank uses AI in its everyday business,” he said. They have to take into account the size of the bank and the complexity of its business. The OCC wants examiners to pay more attention to the damage that AI errors could cause. A model’s risk level should not be based primarily on the technical features of the model. For example, a simple AI tool that can carry out financial transactions may pose a bigger risk than an advanced system used only for internal work.
The framework also suggests tighter restrictions on independent AI operations in higher-risk situations. Banks may need stronger human supervision when their systems can take important decisions or carry out financial activities.
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The OCC said the document is not a mandatory regulation for banks. It does not set any new rules that financial institutions must follow. Instead, it offers direction to examiners on how to review the risk management systems banks already have in place. The regulator said, "The OCC expects that bank activities are conducted in a safe and sound manner and consistent with applicable laws and regulations."
The guidance also applies to smaller community banks. Examiners must consider the size of each bank, its business activities and the risks it faces during their reviews. The move comes as financial regulators in several countries pay closer attention to the growing use of AI in banking. They are studying possible threats linked to cybersecurity, AI systems that operate independently and financial stability. Banks are using AI more often for customer services and other daily activities. Regulators want to make sure these tools are used safely and under proper supervision.
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