On 12 December 2024, the Bank for International Settlement’s Financial Stability Institute published a paper which explores the potential transformative impact of artificial intelligence (AI) on the financial sector. In summary, the paper notes that while AI exacerbates existing risks such as model risk and data privacy, it does not introduce fundamentally new risks apart from gen AI, which may give rise to hallucination and anthropomorphism risks. Most financial authorities have not issued AI regulations specific to financial institutions as existing frameworks already address most of these risks. Nevertheless, some areas require further regulatory attention, including governance, expertise and skills, model risk management, data governance, non-traditional players in the financial sector, new business models and third-party AI service providers.