Rise in Fraud Anticipated with Increased AI Use in Finance, Warns UK Watchdog

The Financial Conduct Authority (FCA), the United Kingdom’s chief financial watchdog, has issued a warning about the increased risk of fraud associated with the growing adoption of Artificial Intelligence, or AI, in financial services.

While AI can provide endless benefits, such as cutting prices for consumers and streamlining operations, it may also pose significant threats to market integrity and consumer protection if not properly managed.

The watchdog has already observed how volatility during a trading day has doubled and amplified compared to during the 2008 global financial crisis.

“This surge in intraday short-term trading across markets and asset classes suggests investors are increasingly turning to highly automated strategies,” the watchdog says.

The…