A new federal watchdog report raises concerns about regulatory blind spots as artificial intelligence becomes more embedded in the financial services sector. According to the new report by the Government Accountability Office (GAO), the National Credit Union Administration (NCUA) lacks two key tools needed to effectively monitor how credit unions are using artificial intelligence.

GAO found that the National Credit Union Administration’s model risk management guidance is limited in both scope and detail, offering insufficient direction to staff and credit unions on managing model risks, including those related to AI.

Additionally, the report highlighted that the NCUA lacks the authority to examine technology service providers, even as credit unions increasingly rely on them for AI-powered services. “GAO reiterates its 2015 recommendation that Congress consider granting NCUA authority to examine technology service providers for credit unions. GAO also recommends that NCUA update its model risk management guidance to encompass a broader variety of models used by credit unions. NCUA generally agreed with the Recommendation,” GAO said in its report.