European regulators warn of escalating cyber threats fueled by rapid AI evolution

The chair of the European Securities and Markets Authority (ESMA), Verena Ross, has issued a stark warning regarding the escalating speed and sophistication of cyberattacks powered by artificial intelligence.

Speaking in an interview in Paris on Friday, Ross stated that the rapid evolution of AI models, combined with heightened geopolitical tensions, has created a precarious environment for the continent's financial institutions.

The regulator has begun contacting supervised entities to assess their cybersecurity defences, particularly following reports that new AI models, such as Anthropic's Mythos, possess the capability to identify and exploit previously undiscovered vulnerabilities within IT systems.

"We are closely watching how bringing AI models into this could increase the potential speed with which such attacks could happen," Ross remarked.

The financial sector has been particularly unsettled this month by the disruptive potential of advanced AI tools.

Ross emphasised that both national and European Union regulators must "up our game" to ensure they have the technical capability to oversee financial entities and the critical third-party technology providers they rely upon.

In November, ESMA identified 19 technology companies as critical to the bloc's financial resilience, though Ross declined to confirm if specific AI providers would be added to this list.

The warning comes as global stock markets reach record highs, driven largely by a surge in technology valuations.

Ross cautioned that underlying cyber vulnerabilities could lead to a sudden and significant reassessment of financial asset values if a major breach occurs.

Regulators are now prioritising the recruitment of technical experts to keep pace with these emerging digital threats.