Overview
- BaFin announced it will immediately start monitoring a sample of AI applications used by banks, insurers and other authorised financial firms to check compliance with new rules.
- The move uses powers granted under the EU AI Act and lets BaFin enforce transparency rules, block prohibited AI practices and levy fines to protect fundamental rights.
- BaFin has identified creditworthiness models and insurance risk‑pricing systems as 'high-risk' AI and will begin targeted high‑risk oversight in December 2027.
- The regulator will assess whether firms meet transparency requirements for customer-facing tools, avoid biased use of sensitive personal data and train staff on AI literacy.
- Firms face trade-offs between faster loan approvals and claims processing from AI and new compliance demands that will require stronger model documentation, governance and staff upskilling.