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CFTC commissioner proposes AI fraud task force



CFTC commissioner proposes AI fraud task force

Commissioner Kristin Johnson made her comments just one day after the CFTC named its first chief AI officer.

Commissioner Kristin Johnson of the United States Commodity Futures Trading Commission (CFTC) recently introduced three proposals to regulate artificial intelligence (AI) technologies within U.S. financial markets.

Speaking at the Technology Advisory Committee meeting held on May 2, Johnson laid out the CFTC’s three-pronged agenda consisting of the establishment of a “principles-based framework” to assess the risks associated with integrating AI into financial markets, heightened penalties for the intentional misuse of AI, and the creation of a task force to “evaluate, assess, and harmonize guidance, supervision, and regulation that addresses the increasing integration of AI in financial markets.”

Although creating investigatory task forces and common-sense risk assessment platforms is not unusual for the government, Johnson’s assertion that crimes committed with AI should face “heightened penalties” could significantly change the current legal framework.

Johnson cited a previous speech given by U.S. Deputy Attorney General Lisa Monaco, who said that “guns enhance danger, so when they’re used to commit crimes, sentences are more severe. Like a firearm, AI can also enhance the danger of a crime.”

Johnson recommends addressing the rise of AI technologies and their potential for misuse in a similar manner:

“To address these concerns, the Commission should introduce heightened penalties for those who intentionally use AI technologies to engage in fraud, market manipulation, or the evasion of our regulations. Bad actors who would use AI to violate our rules must be put on notice and sufficiently deterred from using AI as a weapon to engage in fraud, market manipulation, or to otherwise disrupt the operations or integrity of our markets.”

The commissioner’s speech followed the CFTC’s appointment of its first chief AI officer, Ted Kaouk. Before this role, Kaouk served as the CFTC’s chief data officer and director of the division of data.

Meanwhile, Representative Maxine Waters, the ranking member of the Financial Services Committee, recently wrote to U.S. President Joe Biden, suggesting that he nominate Johnson for the position of assistant secretary for financial institutions at the U.S. Department of the Treasury.

If the nomination and confirmation of Johnson occur, she will play a crucial role in shaping legislation and policies for the U.S. financial market.

Earlier, global artificial intelligence AI experts signed a pact to advocate the responsible use of AI. The pact was signed by over 300 experts in technology, AI, digital ethics, and child safety through an open letter urging governments worldwide to take immediate action against deepfakes. Signatories include figures such as Andrew Yang, cognitive psychologist Steven Pinker, two former Estonian presidents, and several others.

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