FSOC's 2023 annual report, approved December 14, 2023, was the first to identify the use of AI in financial services as an emerging vulnerability to U.S. financial stability. It noted that AI can introduce safety-and-soundness risks such as cyber and model risk and consumer-compliance risks worsened by 'black box' explainability problems, singled out generative AI, and recommended that member agencies monitor rapid AI developments so oversight structures keep pace with emerging risks while facilitating efficiency and innovation.
| Document | FSOC 2023 Annual Report — Financial Stability Oversight Council 2023 Annual Report — Section 3.3.3, The Use of Artificial Intelligence in Financial Services |
| Issued by | U.S. Department of the Treasury (including the Financial Stability Oversight Council) |
| Type | Report |
| Status | Superseded |
| Published | Dec 14, 2023 |
| Applies to | FSOC member agencies (recommendations); informs supervisory priorities for all U.S. financial institutions |
| Superseded by | FSOC 2024 Annual Report |
| Official source | home.treasury.gov ↗ |
| Use cases | AI governance (general) · Model risk management · Cybersecurity · Generative & agentic AI |
What are the key points of FSOC 2023 Annual Report?
- First FSOC annual report to name AI use in financial services as a vulnerability
- Catalogues current uses: fraud prevention and detection, customer service, document review, and retail credit underwriting
- Identifies safety-and-soundness risks (cyber, model risk) and consumer-compliance risks tied to explainability
- Stresses data controls and provenance, including legal permission to use training data and protections when sharing data with third parties
- Describes generative AI as a 2023 focus and flags its capacity to produce human-like text, code, and media
- Recommends member agencies monitor AI developments and update oversight structures while facilitating innovation
What did FSOC 2023 Annual Report change for banks?
Before 2023, AI appeared in FSOC reports only in passing. Elevating it to a named vulnerability signalled to banking supervisors that AI governance, explainability, and data provenance would be examination themes, and it set up Treasury's 2024 RFI and reports.
When did FSOC first flag AI as a financial stability risk?
In its 2023 annual report, approved on December 14, 2023, which called AI use in financial services an emerging vulnerability.
What AI risks did FSOC highlight in 2023?
Cyber and model risk, consumer-compliance risk from unexplainable 'black box' models, and data-provenance and third-party data-sharing risks, with specific attention to generative AI.
| Date | Document | Status |
|---|---|---|
| Dec 6, 2024 | FSOC 2024 Annual Report — Financial Stability Oversight Council 2024 Annual Report — Section 3.3.3, The Use of Artificial Intelligence in Financial Services | Superseded |
| Jun 24, 2026 | FSOC AI Innovation Series (Mar–May 2026) — Artificial Intelligence Innovation Series — FSOC and Treasury AI Transformation Office roundtables | Final |
| Feb 19, 2026 | Treasury FS AI RMF and AI Lexicon (Feb 2026) — Financial Services AI Risk Management Framework (FS AI RMF) and Artificial Intelligence Lexicon | Final |
| Dec 11, 2025 | FSOC 2025 Annual Report — Financial Stability Oversight Council 2025 Annual Report — Section 3.4, Harnessing Artificial Intelligence to Promote Financial Stability | Final |
| Dec 19, 2024 | Treasury AI in Financial Services report (Dec 2024) — Artificial Intelligence in Financial Services — Report on the Uses, Opportunities, and Risks of AI in the Financial Services Sector | Final |
| Oct 17, 2024 | Treasury $4B AI fraud-prevention announcement (Oct 2024) — Treasury Announces Enhanced Fraud Detection Processes, Including Machine Learning AI, Prevented and Recovered Over $4 Billion in Fiscal Year 2024 | Final |
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