MFA sends letter to FSB on sound practices for responsible adoption of artificial intelligence

MFA submitted a letter to the Financial Stability Board (FSB) in support of adoption of artificial intelligence across the financial sector and welcome the Consultation Report's recognition that AI presents both significant opportunities and risks that warrant thoughtful governance.

The letter addresses five principal concerns:

1. Reinforce the flexible, non-prescriptive intent of the Proposed Sound Practices throughout the body of the final report by revising provisions that imply a single or preferred implementation path and confirming that multiple approaches may satisfy each underlying principle.
2. Revise language throughout the Proposed Sound Practices that implies a governance model or organizational structure that is characteristic of large institutional banks and not reflective of the broader financial sector or proportional for many segments of the industry.
3. Clarify that the case studies included in the final report are illustrative only and do not represent the expected or preferred approach to implementing a given sound practice.
4. Modify the Proposed Sound Practices to reflect current AI market realities, in particular with respect to third-party dependency and concentration risk as well as explainability.
5. Direct that the Proposed Sound Practices build upon, rather than duplicate, financial institutions' existing model risk management, data governance, and cybersecurity frameworks, and align AI-specific terminology and definitions with existing industry usage, including through cross-border harmonization, to avoid creating competing standards.