{"id":924959,"date":"2026-10-08T06:24:13","date_gmt":"2026-10-08T06:24:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/924959\/"},"modified":"2026-10-08T06:24:13","modified_gmt":"2026-10-08T06:24:13","slug":"financial-regulator-to-implement-tighter-guardrails-on-banks-use-of-ai","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/924959\/","title":{"rendered":"Financial regulator to implement tighter guardrails on banks\u2019 use of AI"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Office of the Superintendent of Financial Institutions superintendent Peter Routledge says he is generally satisfied with the level of preparedness of Canada\u2019s banks, but some are further ahead than others.Dave Chan\/The Globe and Mail<\/p>\n

Canada\u2019s banking regulator is planning to implement tighter guidelines on artificial intelligence<\/a> as threats from AI agents and Anthropic\u2019s powerful Claude Mythos model escalate risks among the country\u2019s lenders. <\/p>\n

As the pace of AI development surges, banks have been accelerating their use of the technology aimed at cutting costs and generating financial returns. Office of the Superintendent of Financial Institutions superintendent Peter Routledge has tasked his team to work on creating a \u201csafety code\u201d to improve cybersecurity and mitigate risks, he said during a conference Wednesday held by the Global Risk Institute. <\/p>\n

The regulator is still working on the details, but Mr. Routledge said the safety code could consist of broad, high-level standards that provide a basic level of safety and protection for the financial system, while also establishing a \u201cwide perimeter for innovation.\u201d <\/p>\n

Rather than implement a regulatory framework prior to now, OSFI has guided banks to \u201cdo no harm,\u201d Mr. Routledge said. In 2023, the regulator and the GRI published a report on the implications of AI on financial services institutions. OSFI has also previously listed AI in its annual risk outlook. <\/p>\n

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The introduction of Mythos, which Anthropic has restricted the use of because it is capable of finding and exploiting weak spots in software<\/a> that could open companies to cyberattacks, was the catalyst that spurred OSFI to consider firmer guardrails on the banking industry\u2019s use of the technology. <\/p>\n

\u201cThat was an event that signifies the advancing capabilities of frontier AI models, which could be turned for illicit purposes and attack the financial institutions. That constituted a major increase in cyber risk,\u201d Mr. Routledge told reporters during a media scrum on Wednesday. <\/p>\n

\u201cAnd then the more recent stories we\u2019re reading about how agents are interpreting their task authorizations liberally and potentially posing dangers to institutions \u2013 that\u2019s frightening, and that is a risk that is front and centre for us.\u201d <\/p>\n

Canadian banks have been accelerating AI research and implementation. On Tuesday, AI benchmarking platform Evident ranked all of Canada\u2019s five biggest banks<\/a> in the top 30 of a list of 50 global financial institutions on AI adoption. <\/p>\n

Mr. Routledge said he is generally satisfied with the level of preparedness of Canada\u2019s banks, but \u201cnot all institutions across the system are equal on AI\u201d as some are further ahead than others. <\/p>\n

If an issue arose at one financial institution, it could spread through Canada\u2019s banking system.<\/p>\n

\u201cWhat if one of your counterparties does something wrong?\u201d Mr. Routledge said. \u201cYou\u2019re connected to your counterparties, and if there\u2019s poison at the counterparties, it\u2019s flowing through to you as an institution. Our highest utility is to try and lessen the risk that some poison gets into one institution and scatters throughout the system.\u201d <\/p>\n

Canada\u2019s plan to counter the U.S. and China in AI is taking shape. Will it work?<\/a><\/p>\n

The federal government has been courting investment to build data centres that power the boom in AI demand. While Ottawa says it is attempting to secure Canada\u2019s data sovereignty, the technology also poses significant risks, GRI chief executive officer Sonia Baxendale said. <\/p>\n

\u201cWe know the very technology required to strengthen our resilience also creates new threats to our institutions, to our national security, and to democracy itself,\u201d she said. <\/p>\n

\u201cWith trust in traditional institutions at historic lows, a small number of global technology firms now control the platforms that increasingly shape how we communicate, consume information and make decisions.\u201d <\/p>\n

Mr. Routledge also cited private credit and private equity as mounting risks, and said OSFI will highlight the issue in its risk outlook, set to be published Thursday. <\/p>\n

\u201cWe are not seeing sizable risk concentrations that give us heartburn in this sector, but the aggregate concentration is growing,\u201d he said. <\/p>\n

As Ottawa has urged institutions to help drive its nation-building efforts, OSFI has introduced measures aimed at making more bank lending available. In June, the regulator lowered the size of the capital cushion<\/a> the country\u2019s biggest banks must hold, freeing up billions of dollars. <\/p>\n

The regulator is also examining ways to even the playing field for smaller banks, Mr. Routledge said, with the intention of helping those institutions increase lending. Over the next six months, OSFI will be examining how its capital framework may disadvantage small- and medium-sized lenders. <\/p>\n

He referred to this as a \u201ccompetitive imbalance\u201d between the smaller banks that follow a standardized approach and the larger banks that use internal ratings to manage capital.<\/p>\n

Earlier in the day, federal Natural Resources Minister Tim Hodgson urged the room of financial institution leaders to help finance Ottawa\u2019s nation-building projects \u2013 initiatives that banks have often been considered too risky for lending.<\/p>\n

\u201cWhen someone walks into a bank or an asset manager with a $10-billion project, you don\u2019t hand them the money without asking about the risks,\u201d Mr. Hodgson said. <\/p>\n

\u201cWe understand the government cannot eliminate risk for opponents, and we understand these should not insulate investors with bad investment decisions. However, there are cases where governments can use its suite of tools to change the balance between expected risks and returns of strategically important investments.\u201d <\/p>\n

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Ottawa is using a variety of measures to help make it easier for banks to lend to riskier businesses and projects, including loan guarantees and potential co-investments, Mr. Hodgson said. <\/p>\n

As the U.S. wages its trade<\/a> war with Canada, President Donald Trump has taken fresh aim at the Canadian banking sector. In September, he repeated his incorrect claim the U.S. banks are unable to operate in Canada. <\/p>\n

But when mid-sized banks have been put on the auction block in recent years, there were no U.S. buyers, Mr. Routledge said. <\/p>\n

\u201cAll the acquirers were Canadian, and they weren\u2019t Canadian because we had any bias geographically,\u201d he said.<\/p>\n

\u201cThey were who stood up with a bid, and any foreign bank could have stood up with a bid, and we would have looked at it exactly the same way as a Canadian bidder. We are geographically agnostic.\u201d <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Office of the Superintendent of Financial Institutions superintendent Peter Routledge says he is…\n","protected":false},"author":2,"featured_media":924960,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,901,276,277,888,902,879,877,903,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-924959","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-alberta","tag-artificial-intelligence","tag-artificialintelligence","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/924959","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=924959"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/924959\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/924960"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=924959"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=924959"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=924959"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}