Artificial intelligence is no longer an experimental side project in banking. It is fast becoming the engine room. From split-second credit decisions and real-time fraud detection to customer service chatbots and algorithmic trading strategies, AI is now woven into virtually every corner of modern financial services. Consequently, with the EU Artificial Intelligence Act now fully in force, the regulatory landscape has shifted decisively. Banks that fail to adapt now risk being caught out legally, and by more nimble competitors.
A New Rulebook for a New Era
Building on this shift, as of November 2025, the EU AI Act introduces the world’s first comprehensive, risk-based regulatory framework for artificial intelligence. Many tools now standard in banking, including credit assessment systems, fraud monitoring, biometric identification and regulatory compliance technologies, fall squarely into the high-risk category. That designation carries significant consequences for firms. Mandatory explainability, rigorous data governance, human oversight, continuous monitoring, and detailed audit trails are now baseline expectations.
In other words, for banks, this is not a routine compliance refresh. It is a structural transformation. Boards now carry explicit AI governance responsibilities. Model risk management now extends far beyond traditional financial models into the murkier waters of machine learning, areas which, candidly, are still not well understood at board level across much of the industry. Legal, Risk, IT and Compliance teams must collaborate more closely than ever before, not least because the penalties for failure are severe. Enforcement powers under the AI Act include fines running into tens of millions of euros and the mandatory withdrawal of non-compliant systems from the market. Moreover, enter the whistleblower.
Enter the Whistleblower
Alongside tougher rules come sharper enforcement. The European Commission launched the AI Act Whistleblower Tool under its Shaping Europe’s Digital Future initiative. This secure, encrypted reporting portal allows employees, contractors and even members of the public to anonymously flag suspected AI Act breaches directly to the EU AI Office. Evidence can be uploaded, communication with investigators remains confidential, and whistleblower protections are being strengthened across all member states.
For banks and financial services firms, this fundamentally reshapes accountability. Problems that might once have stayed buried inside opaque algorithms are now far more likely to surface rapidly and publicly. The message from Brussels is unmistakable. Transparency is no longer optional.
Risk and Reward
Yet within this tighter framework lies genuine opportunity. Institutions that embed AI governance early, invest in explainable models and rigorously document their decision-making will stand out, not just to regulators, but to customers and investors. In digital finance, trust is fast becoming the most valuable currency of all.
In conclusion, at Leaman Crellin, we see the AI Act not as a regulatory hurdle, but as a defining moment for responsible innovation in financial services. The banks that thrive will be those that treat AI as both a strategic asset and a regulated risk, knowing full well that whistleblowers, regulators, and customers are all paying close attention.
