CFTC Commissioner Wants to Create AI Fraud Task Force

United States Commodity Futures Trading Commission Commissioner Christine Johnson recently presented three proposals to regulate artificial intelligence (AI) technologies as they apply to US financial markets.

At the May 2 meeting of the Technology Advisory Committee, Johnson laid out the CFTC's three-pronged agenda, establishing a “principles-based framework” to assess the risks associated with integrating AI into financial markets, including penalties for intentional misconduct. Misuse of AI and creation of a task force to “assess, evaluate and harmonize guidance, oversight and regulation regarding the increasing integration of AI in financial markets”.

Although the government's call for an investigative task force and common sense risk assessment platforms are nothing new, Johnson's claim that crimes committed using AI should be “severely punished” represents a significant change to the current legal framework.

Johnson quoted US Deputy Attorney General Lisa Monaco as saying in a previous speech that “guns increase the risk, so when they are used to commit a crime, the punishment is more severe.” Like guns, AI can also improve the risk of crime.

According to Johnson, the advent of AI technologies and their potential for abuse should be treated in the same way:

“To address these concerns, the Commission should introduce stiffer penalties for those who intentionally use AI technologies to commit fraud, market manipulation, or evade our rules. Notify and adequately deter bad actors who use AI to violate our rules by using AI as a tool to commit fraud, market manipulation, or otherwise disrupt the operations or integrity of our markets.” They have to.

The commissioner's speech comes on the heels of the appointment of Ted Kauk, the CFTC's first chief AI officer. Kaok's previous role at the CFTC was as Chief Data Officer and Director of Data Division.

Meanwhile, Representative Maxine Waters, a senior member of the Financial Services Committee, has written to US President Joe Biden to nominate Johnson as Assistant Secretary for Financial Institutions at the US Treasury. If nominated and confirmed, Johnson will play a key role in establishing laws and policies related to US financial markets.

Related: UK government calls for action on AI copyright, market competition