Singapore’s central bank wants all FinTech AI use cases subject to independent review

The Monetary Authority of Singapore (MAS), acting as both central bank and finance industry regulator, is urging all local industry players to undergo independent review of their artificial intelligence (AI) use cases before deployment. Singapore, known for its strict regulations and low taxes, is a major finance hub. MAS's guidelines, published on Wednesday, highlight that while AI can improve performance, its complexity and probabilistic nature can lead to greater uncertainty and unexpected behavior.

The regulator fears that AI, especially generative AI, could amplify these risks due to inherent noise in training data and encounters with scenarios not present during training. MAS demands financial institutions review their AI use cases, including underlying systems and models, to ensure proper controls and testing. Ongoing monitoring is also critical to ensure AI operates as intended over time.

MAS holds financial institutions accountable for third-party AI services, requiring them to monitor suppliers' products and services and apply compensating controls if necessary. FIs must maintain up-to-date inventories of all AI used in their business and develop contingency plans for high-risk AI applications to ensure business continuity in case of failure or unexpected behavior. These guidelines are set to take effect on October 7, 2027.