The Financial Stability Board (FSB) has called for tighter controls on AI deployment in financial services, warning that new technologies such as agentic AI bring unique risks.

In its report Sound Practices for Responsible Adoption of Artificial Intelligence (AI), the global financial watchdog lays out 12 “sound practices” for responsible AI adoption in financial services.

These recommendations cover governance, lifecycle management, and risk management requirements that the watchdog sees as essential to safe AI deployment.

“The board and senior management of financial institutions are strongly encouraged to reference the sound practices as they consider business strategy, technology adoption, and risk management in an increasingly AI enabled environment,” the regulator wrote.

On governance, the FSB urged financial leaders to align their AI adoption with their organisation’s strategy and risk appetite, adopt risk management frameworks that address potential AI risks, and continue to adjust these measures as AI evolves.

The watchdog also toldfinancial institutions to carefully assess whether to adopt third-party AI models or develop their own in-house, where “traditional” AI can be used rather than agentic AI, and how explainable their AI models are.

All of this, the FSB added, must be underpinned with proper data governance and human oversight of AI activities.

It also cautioned that AI models present their own risks, with sound practices 11 and 12 recommending financial institutions adapt their cyber risk plans to assess the dangers of AI deployment and properly manage the risks associated with third-party AI use.

On the risks that AI agents pose in particular, the FSB wrote: “An AI use case can pose high risks even if it is not material. For example, an AI agent performing a low materiality task may still have access to ICT assets or a significant amount of sensitive data.

“Consequently, the agent could cause significant harm to the financial institution or its customers if it accidentally or intentionally acts outside defined parameters.”

The FSB acknowledged that AI has rapidly evolved since its 2024 report on how the technology will impact the financial services sector and noted that it may have to reassess its recommendations in the near future.

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