The Conference of State Bank Supervisors (CSBS) has introduced a new resource for state examiners reviewing how AI is used and what risks it may pose at state-chartered banks and state-licensed nonbank financial institutions.
The document, which has been made public, is meant to give regulated firms a clearer picture of how state examiners may approach AI-related reviews.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
It outlines the broad lines of enquiry, the kinds of questions that may be asked, and the information examiners could seek about AI-based products, services and internal tools.
CSBS said the AI Supervisory Framework is intended as a discretionary aid for state examiners.
Its purpose is to help them recognise and understand AI activities at financial institutions, evaluate related risks, and decide whether further scrutiny is needed through existing supervisory channels.
The framework is designed to reflect differences in an institution’s size, complexity, risk profile and level of AI use.
In preparing the framework, CSBS drew on existing AI risk management references, including the National Institute of Standards and Technology’s AI Risk Management Framework, the Cyber Risk Institute’s Financial Services AI Risk Management Framework, and the US Department of the Treasury’s AI Lexicon.
The framework can also be used by financial institutions themselves to review their AI arrangements, put governance and risk controls in place, and get ready for supervisory examinations.
How far the framework is folded into supervisory work will be decided by each state agency.
CSBS president and CEO Brandon Milhorn said: “The use of AI provides a powerful new tool for financial institutions to improve services, protect consumers, and increase operating efficiency. While any new technology can present risks, the CSBS AI Supervisory Framework provides a principles-based approach to governance intended to help financial institutions explore and implement AI with additional confidence.”
The CSBS is a national body that supports a network of state financial regulators across all 50 states.
On behalf of state regulators, it also runs the Nationwide Multistate Licensing System, which is used to license and register non-depository financial service providers in the mortgage, money services business, consumer finance and debt sectors.
