The Monetary Authority of Singapore (MAS) has issued a consultation paper proposing a set of Guidelines on AI Risk Management to provide financial institutions (FIs) with guidance on the responsible use of AI in the financial sector.

The proposed Guidelines are intended to apply to all FIs and outline MAS’ supervisory expectations regarding oversight of AI risk management, key risk management systems, policies and procedures, lifecycle controls, and the capabilities and capacity required for AI use.

MAS notes that AI can be applied across a wide range of use cases, and that risks may vary depending on the scale, scope and business models of FIs.

The Guidelines are designed to provide expectations that are broadly applicable across the financial sector and can be applied proportionately, taking into account the size and nature of an FI’s activities, its AI usage, and risk profile.

They cover various AI applications and technologies, including generative AI and newer developments such as AI agents.

The Guidelines set expectations in several key areas.

For oversight of AI risk management, boards and senior management are expected to establish and implement frameworks, structures, policies and processes, and to foster an appropriate risk culture for AI use.

For risk management systems, policies and procedures, FIs should identify AI use across the organisation, maintain accurate AI inventories, and implement risk assessments that consider impact, complexity, and reliance.

Regarding AI lifecycle controls, capabilities and capacities, FIs should implement controls over data management, fairness, transparency and explainability, human oversight, third-party risks, evaluation and testing, monitoring, and change management.

These controls should be proportionate to the assessed materiality of AI-related risks.

FIs should also ensure their capabilities and resources are sufficient to manage their AI use.

The Guidelines build on MAS’ thematic review of major banks’ AI use in 2024 and discussions with financial institutions.

Ho Hern Shin, Deputy Managing Director, said:

“The proposed Guidelines on AI Risk Management provide financial institutions with clear supervisory expectations to support them in leveraging AI in their operations. These proportionate, risk-based guidelines enable responsible innovation by financial institutions that implement the relevant safeguards to address key AI-related risks.”

MAS invites interested parties to submit comments on the proposals by 31 January 2026.

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