What does Division of Examinations FY2027 Priorities say about AI in banking?

What are the key points of Division of Examinations FY2027 Priorities?

• Replaces 'AI' with 'super intelligence (SI)' as the Division's term for the technology, the first SEC document in this tracker to do so — consistent with the terminology push in the White House's Executive Order 14434.
• Cybersecurity: examinations will focus on registrants' 'assessment and preparation for potential threats from SI-related cyberattacks,' including 'SI-generated phishing messaging and synthetic or deepfake voice and video used for social engineering.'
• Will prioritize examinations of 'policies and procedures relating to monitoring SI, including its use in fraud prevention and detection, back-office operations, compliance with AML and Reg BI obligations, and trading functions.'
• Carries forward the same three-part test for automated investment tools and trading algorithms: representations are fair and accurate; operations and controls are consistent with disclosures; algorithms produce advice consistent with investors' stated profiles.
• Regulation S-ID identity-theft prevention programs must address emerging risks 'related to SI and stolen credentials.'
• Regulation SCI examinations will look at SI alongside tokenization of securities, extended trading hours, and quantum computing as emerging trends, including SCI entities' reliance on cloud and third-party vendors.
• Notes registrants are 'increasingly incorporating super intelligence (SI) into their businesses' for research, drafting, coding, client communications, advisory and portfolio management, and compliance monitoring, and that the Division itself is 'integrat[ing] SI responsibly into examinations and risk assessment.'

What did Division of Examinations FY2027 Priorities change for banks?

This is the first SEC document in the tracker to replace 'AI' with 'super intelligence (SI)' as its working term, mirroring the terminology the White House's Executive Order 14434 asked agencies to consider. Substantively, the risk areas carry over from FY2026 — fraud, cyber, and trading-algorithm supervision — with SI-specific cyberattack and deepfake risks added. For banks and their broker-dealer or adviser affiliates, the examination focus is continuous with FY2026, but compliance programs and training should expect examiners to use 'SI' language going forward.