# FSOC 2025 Annual Report: Financial Stability Oversight Council 2025 Annual Report — Section 3.4, Harnessing Artificial Intelligence to Promote Financial Stability

Source: https://www.bankingnewsai.com/ai-regulation/documents/fsoc-annual-report-2025
Last updated: Aug 26, 2026

FSOC's 2025 annual report, unanimously approved December 11, 2025, made 'harnessing AI to promote financial stability' one of four priority areas and formalized an FSOC Artificial Intelligence Working Group. The Council recommends member agencies use the working group to explore AI opportunities for resilience, monitor stability risks from AI adoption inside and outside finance, identify high-value AI use cases agencies can adopt in supervision, and run a public-private forum on regulatory impediments to responsible AI adoption. It adopts the Executive Order 14179 definition of AI (15 U.S.C. 9401(3)) and notes Treasury appointed a Chief AI Officer in June 2025.

## At a glance

| Field | Value |
| --- | --- |
| Authority | [U.S. Treasury](https://www.bankingnewsai.com/ai-regulation/treasury) |
| Type | Report |
| Status | Final |
| Published | Dec 11, 2025 |
| Applies to | FSOC member agencies (recommendations); informs supervisory priorities for all U.S. financial institutions |
| Official text | https://home.treasury.gov/system/files/261/FSOC2025AnnualReport.pdf |

## Key points

- Restructured report names four priorities: Treasury market resilience, cyber risk, modernizing bank supervision, and harnessing AI
- Creates four working groups including a standing Artificial Intelligence Working Group
- Recommends the AI Working Group identify high-value AI use cases for agencies' own supervision and regulation
- Recommends the working group serve as a public-private forum to identify regulatory impediments to responsible AI adoption
- Supports member agencies' efforts to foster responsible AI adoption by regulated entities and international engagement on AI risks and benefits
- Notes community banks' resource gap and their reliance on bank-fintech partnerships and third-party AI
- Cites Treasury's own use of AI-enhanced fraud detection (over $4 billion in improper payments prevented or recovered) and a member agency's ML review of regulatory reports
- Records Treasury's June 2025 Chief AI Officer appointment and the creation of the Treasury AI Transformation Office

## What changed for banks

The tone flipped from monitoring risk to enabling adoption: FSOC now frames reluctance to innovate as itself a potential stability risk and tasks its AI Working Group with clearing regulatory obstacles. For banks this signals that supervisors are being pushed to accommodate AI use cases, including in fraud, cyber defense, and compliance, rather than to restrict them, while concentration and third-party risks stay on the watch list.

## Use cases it governs

- [AI governance (general)](https://www.bankingnewsai.com/ai-regulation/by-use-case#governance-general)
- [Fraud detection](https://www.bankingnewsai.com/ai-regulation/by-use-case#fraud)
- [Cybersecurity](https://www.bankingnewsai.com/ai-regulation/by-use-case#cybersecurity)
- [Third-party & vendor AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#third-party-vendors)
- [Generative & agentic AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#generative-agentic-ai)
- [Trading & capital markets](https://www.bankingnewsai.com/ai-regulation/by-use-case#trading-markets)

Supersedes: [FSOC 2024 Annual Report](https://www.bankingnewsai.com/ai-regulation/documents/fsoc-annual-report-2024).

## FAQ

### What is the FSOC AI Working Group?

A working group formalized in FSOC's December 2025 annual report to explore AI opportunities for financial resilience, monitor AI-related stability risks, identify high-value AI use cases for member agencies, and host public-private dialogue on regulatory impediments to responsible AI adoption.

### How does the FSOC 2025 report define AI?

It follows Executive Order 14179, referencing 15 U.S.C. 9401(3): a machine-based system that, for a given set of human-defined objectives, makes predictions, recommendations, or decisions influencing real or virtual environments.

## Related documents

- [FSOC 2024 Annual Report](https://www.bankingnewsai.com/ai-regulation/documents/fsoc-annual-report-2024) — Financial Stability Oversight Council 2024 Annual Report — Section 3.3.3, The Use of Artificial Intelligence in Financial Services (Dec 6, 2024)
- [FSOC AI Innovation Series (Mar–May 2026)](https://www.bankingnewsai.com/ai-regulation/documents/treasury-fsoc-ai-innovation-series-2026) — Artificial Intelligence Innovation Series — FSOC and Treasury AI Transformation Office roundtables (Jun 24, 2026)
- [Treasury FS AI RMF and AI Lexicon (Feb 2026)](https://www.bankingnewsai.com/ai-regulation/documents/treasury-fs-ai-rmf-and-ai-lexicon-2026) — Financial Services AI Risk Management Framework (FS AI RMF) and Artificial Intelligence Lexicon (Feb 19, 2026)
- [Treasury AI in Financial Services report (Dec 2024)](https://www.bankingnewsai.com/ai-regulation/documents/treasury-ai-financial-services-report-2024) — Artificial Intelligence in Financial Services — Report on the Uses, Opportunities, and Risks of AI in the Financial Services Sector (Dec 19, 2024)
- [Treasury $4B AI fraud-prevention announcement (Oct 2024)](https://www.bankingnewsai.com/ai-regulation/documents/treasury-ml-fraud-prevention-fy2024) — Treasury Announces Enhanced Fraud Detection Processes, Including Machine Learning AI, Prevented and Recovered Over $4 Billion in Fiscal Year 2024 (Oct 17, 2024)
- [Treasury AI RFI (June 2024)](https://www.bankingnewsai.com/ai-regulation/documents/treasury-ai-financial-services-rfi-2024) — Request for Information on Uses, Opportunities, and Risks of Artificial Intelligence in the Financial Services Sector (Jun 12, 2024)
- [Treasury AI cybersecurity risks report (Mar 2024)](https://www.bankingnewsai.com/ai-regulation/documents/treasury-ai-cybersecurity-risks-report-2024) — Managing Artificial Intelligence-Specific Cybersecurity Risks in the Financial Services Sector (Mar 27, 2024)
- [FSOC 2023 Annual Report](https://www.bankingnewsai.com/ai-regulation/documents/fsoc-annual-report-2023) — Financial Stability Oversight Council 2023 Annual Report — Section 3.3.3, The Use of Artificial Intelligence in Financial Services (Dec 14, 2023)

Last reviewed Aug 26, 2026. Cite the official text (https://home.treasury.gov/system/files/261/FSOC2025AnnualReport.pdf) for the rule and this page for the summary and dates.

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