US Regulators Require Banks to Strengthen Ongoing Risk Monitoring of AI and Automated Systems

The Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC) and Federal Reserve jointly oversee banks’ risk governance. As financial institutions deploy AI for lending, transaction monitoring and anti-money laundering (AML) operations, regulators are expanding their focus beyond pre-deployment testing to continuous validation after models go live. They also require banks to retain professional judgment and ultimate accountability.

The latest guidance requires banks to maintain traceable, reviewable records for AI and automated decision-making, continuously monitor model bias, performance degradation and anomalous outcomes, and clearly define management responsibilities. As of July 20, 2026, the measures did not involve any specific fines or transaction amounts. However, the OCC, FDIC and Federal Reserve stressed that financial institutions must not delegate risk management and AML compliance judgments entirely to algorithms.