Swiss Watchdog FINMA Builds Generative AI to Police Crypto Markets

Financial regulators must adopt artificial intelligence tools to counter those already being used in cyberattacks, Marlene Amstad, chair of the Swiss Financial Market Supervisory Authority (FINMA) and chair of the International Organization of Securities Commissions (IOSCO), told Reuters in a report posted Friday (June 26).

Amstad spoke with Reuters after a hackathon in which about 100 policy and technology specialists worked together to build tools for supervising crypto markets, according to the report.

FINMA helped create a forum within IOSCO that encourages global financial market regulators to adopt AI, per the report.

“As hackers move faster, banks must adapt by patching vulnerabilities more rapidly,” Amstad said in the report.

An IOSCO committee chaired by Amstad, the SupTech Forum, which focuses on supervisory technology (SupTech), developed a report released June 18 that found that AI is an increasingly important tool for supervision and regulatory oversight, IOSCO said in a post on LinkedIn.

The organization said in a June 18 press release that the report, “SupTech: Mapping the Use of Technology in Financial Supervision,” found that authorities are using technology for consumer and investor protection, capital markets supervision and new domains such as digital assets.

“Authorities are increasingly seeking to integrate SupTech into core supervisory functions,” IOSCO said in the release. “Artificial intelligence, data access and cloud infrastructure are seen as critical enablers, with efficiency, timeliness of information reception and analysis, and improved capabilities driving adoption.”

In a speech delivered Tuesday (June 23) at the Point Zero Forum in Zurich, Amstad said the IOSCO report showed that “AI can transform the very way we process data, derive insights and reach decisions. That goes to the heart of how we do our work.”

The technology’s use cases include automated document analysis, market abuse investigations, sentiment analysis and crypto exposure monitoring, Amstad said.

FINMA is developing a generative AI tool that scans the documents supervisors must read before conducting an on-site inspection and flags anomalies that are worth a closer look. A second generative AI tool then checks those suggestions to make sure they are not hallucinations and then passes them along to the supervisor, Amstad said.

The regulator is also developing AI-powered tools that spot suspicious trading patterns and determine if they point to insider trading, Amstad said.

FINMA has also developed a dashboard for real-time crypto monitoring that combines the quantities reported each quarter with daily market prices to spot concentration risks in which too much rests on a single institution and operational risks of tokens on a single blockchain, Amstad said.

“These are only some of many examples, but I hope they make the abstract concrete: for us, SupTech is no longer a promise — it is already at work,” Amstad said.