United States Commodity Futures Trading Commission (CFTC) Commissioner Kristin Johnson has proposed the establishment of an AI fraud task force and heightened penalties for individuals who use artificial intelligence (AI) to commit fraud, market manipulation, or evade regulations. Johnson made these remarks during the Technology Advisory Committee meeting on May 2, just a day after the CFTC appointed its first chief AI officer, Ted Kaouk.

Johnson outlined a three-pronged agenda for the regulation of AI technologies in financial markets, including a "principles-based framework" to assess the risks associated with AI integration, heightened penalties for intentional AI misuse, and a task force to evaluate and harmonize guidance, supervision, and regulation of AI in financial markets.

The proposal for heightened penalties is significant, as it would pose changes to the existing legal framework. Johnson cited a previous speech by U.S. Deputy Attorney General Lisa Monaco, who compared the use of AI in crimes to the use of firearms, suggesting that both enhance danger and should be treated accordingly. Johnson emphasized that bad actors who use AI to violate rules must be deterred and held accountable.

The CFTC's appointment of a chief AI officer and Johnson's proposal come as the U.S. government is increasingly focused on AI regulation. Representative Maxine Waters has also recommended Johnson for the position of assistant secretary for financial institutions at the U.S. Department of the Treasury, which would play a key role in instituting legislation and policies related to the U.S. financial market.

The proposal for an AI fraud task force and heightened penalties for AI-enabled crimes demonstrates the growing concern about the potential misuse of AI in financial markets. As AI technologies continue to evolve and integrate into financial markets, regulators are seeking to address the associated risks and ensure the integrity of the markets.