Amid rapid advances in artificial intelligence, Australia’s financial regulator has raised concerns about the sector’s ability to keep up with emerging cyber threats.
The Australian Prudential Regulation Authority (APRA) has warned that banks in the country are not evolving their cybersecurity practices fast enough to match developments in AI. In a letter to banks, the regulator said frontier AI systems, including Anthropic’s Claude Mythos, could enable larger, faster, and more complex cyber attacks.
“It also warns frontier AI models such as Anthropic’s Claude Mythos, which could enhance the discovery of vulnerabilities by bad actors, are expected to further increase the probability, speed and scale of cyber attacks,” APRA said in a statement based on its recent review.
Experts have highlighted that Mythos, with its advanced coding capabilities, can identify cybersecurity vulnerabilities at an unprecedented level. The model is currently being tested under Project Glasswing, a restricted access programme involving major technology companies such as Amazon, Microsoft, Nvidia, and Apple.
APRA noted that while banks recognise the need to improve cyber resilience, many are still struggling to upgrade their capabilities in line with the evolving threat landscape. “APRA has heard clear recognition from regulated entities of the need for a step change in cyber practices and a continuing uplift in capabilities to protect IT assets in an evolving threat environment,” it said.
The regulator also pointed out that banks are relying too heavily on AI model summaries and vendor information without fully assessing potential risks. “APRA observed many boards are still developing the technical literacy required to provide effective challenge on AI-related risks and oversight,” the letter said.
Although strong security measures are already in place, APRA stressed that some systems are not designed to keep pace with rapid AI innovation.
Australia is also working with software providers, including Anthropic, to address potential cybersecurity risks, according to a government spokesperson.
Separately, a ratings agency said AI is expected to influence the credit profiles of Asia-Pacific financial institutions over the next 1–5 years. While large technology budgets may help banks manage risks, AI could also improve efficiency and reduce costs.
The warning highlights the growing urgency for financial institutions to strengthen cybersecurity as AI capabilities continue to advance.
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