AI as a Tool for Uncovering Irregularities in Finance
Bank of England Governor Andrew Bailey has emphasized the pivotal role that artificial intelligence (AI) can play in the supervision of financial systems, calling AI tools an asset in the search for the regulatory “smoking gun” during complex investigations. Speaking on September 22, 2025, Bailey underscored that AI-powered analytics can increase oversight efficiency for both traditional financial systems and digital assets, enabling regulators to detect anomalies and irregularities that might otherwise go unnoticed[1].
Implications for Compliance and Surveillance
Bailey’s remarks come at a time when global financial authorities are investing heavily in new technologies to keep pace with evolving risks and financial products. Within the United Kingdom, the integration of AI is shaping expectations for compliance and surveillance, especially across platforms regulated by the Financial Conduct Authority (FCA) and the Bank of England itself[1][3]. AI is increasingly used to analyze vast datasets, track market abuse, and spot suspicious transactions faster than manual monitoring could achieve.
- AI can automate the detection of abnormal trading patterns and compliance breaches.
- Regulators plan to continue evolving their supervisory tools to incorporate advances in AI, including through frequent market intelligence and the national AI Policy Directorate and AI Safety Institute.
- New rules may soon apply to third parties providing essential data and AI models to financial institutions, as regulators assess which providers could be “critical” for market stability[3].
Impact on Markets and Crypto Assets
Bailey's comments are already resonating through the cryptocurrency sector, where the prospect of AI-regulated environments is boosting interest in decentralized AI-related blockchain tokens. Projects such as Fetch.ai and SingularityNET—whose tokens (FET and AGIX) are linked to AI development—may experience market momentum as regulatory clarity and AI-driven oversight are viewed positively by investors[1].
AI and Cybersecurity in the Financial Sector
The increased adoption of AI brings challenges as well as opportunities. The Bank of England has highlighted that while AI boosts regulatory power, it also adds complexity to cybersecurity risks. In the bank’s latest surveys, concerns over cyber threats and the potential for malicious actors to employ AI tools were ranked as top risks for the financial services sector. The Financial Policy Committee (FPC) identified the need for operational resilience and a proactive approach to AI risk monitoring, both domestically and internationally[3].
International and Regulatory Coordination
The Bank of England, along with the Prudential Regulation Authority (PRA) and FCA, is actively involved in global initiatives to standardize the safe adoption of AI in financial markets. They monitor international developments to assess both benefits and systemic vulnerabilities arising from AI, adapting the regulatory framework to evolving threats without stifling innovation[3].
Looking Forward: The Future of AI in Financial Oversight
Bailey’s perspective situates the UK at the forefront of AI adoption in financial regulation. With continued collaboration across industry and government, and growing reliance on technologies like
ChatGPT for intelligent data analysis, the regulatory landscape is set to evolve rapidly. As financial institutions and regulators embrace AI, stakeholders should remain attentive to new compliance requirements, cybersecurity challenges, and opportunities emerging from this technological shift.
