Stay informed with free updates
Just sign up for artificial intelligence myFT Digest — delivered straight to your inbox.
A tough new record was set in the business world this week. A scammer used a deepfake bot to trick an employee of a Hong Kong company into transferring him $25 million. This is not the first time such a scam has occurred. But what makes this case so chilling is its unprecedented scale and the fact that artificial intelligence was used to create a fake version of the company's chief financial officer. Yes, it is.
This is not the only fear of bots today. Last fall, Slovak politician Michal Šimečka lost his election after a fake recording of himself went viral. That's ominous in the run-up to the 2024 US presidential election.
And last month, singer Taylor Swift's pornbot went viral. It sparked righteous anger. But what's doubly frightening is how prevalent such bots have become. For example, human rights activists told me that women activists are increasingly being shamed into silence in the Middle East.
So what can you do? Thankfully, policymakers are finally starting to wake up. In the United States, politicians like Sen. John Hickenlooper are pushing for state and federal regulations regarding bots. This week, EU negotiators agreed on measures to criminalize the creation and distribution of harmful bots. India has also introduced “explicit” new rules.
However, the EU rules will not come into force until 2027, and Congress has not yet even debated the US-proposed legislation. Therefore, another way to approach this issue could be to not only create new AI-related laws, but also reuse existing rules from other business areas.
This is already underway with laws regarding privacy rights in the media or intellectual property in the creative industries and consumer goods sectors. But another possibility that has been overlooked so far is the world of finance.
The starting point is to recognize that, as philosopher Daniel Dennett has pointed out, bots are essentially “impersonations” of humans. As historian and author Yuval Harari recently told me, this makes it interesting to examine how governments have combated “counterfeit goods” elsewhere, particularly in the field of money throughout history. suggests that it is necessary to do so.
In some ways, the lessons that history teaches us are discouraging. Benjamin, one of America's Founding Fathers and whose face is now on the $100 bill, consider his experiences with Franklin. In the 18th century, he pioneered efforts to combat banknote counterfeiting, which proliferated during the Revolutionary War. Scientists at the University of Notre Dame say the effort, at the time perhaps the largest in history, involved an innovative approach using dyes and paper.
It worked fine for a while. But fraudsters fought back, and according to Congress, by the 19th century, between one-third and half of all U.S. paper money in circulation was counterfeit. (Perhaps this is why Franklin is famous today for his innovations in bifocals and lightning rods.)
However, there is a surprising and encouraging development here. Although digitalization has made it cheaper than ever to create counterfeits, less than 0.01% of all banknotes in circulation around the world are counterfeit, according to the US Federal Reserve. For pounds it is 0.0031 percent.
Why did fakes decline? The Boston Fed attributes this to innovative detection systems that increasingly leverage AI and increased interagency and cross-border cooperation through Interpol and other agencies. But I think another important issue is that the law is clear and the public knows that counterfeit money is illegal because there is hardly a week in America without news of a successful prosecution. .
These prosecutions primarily target the counterfeiters themselves, who can face up to 15 years in prison and $15,000 in fines. However, if you intentionally use counterfeit products to deceive others, you may be charged with fraud. And while institutions that unknowingly handle counterfeit goods have so far largely escaped prosecution, that may change in the future.
In the EU, Amazon is being sued over the sale of counterfeit goods on its platform. If the case is successful, it could set a precedent that could spread. In any case, it is clear that banks face strong incentives to conduct extensive surveillance to prevent counterfeit goods.
Of course, bots are not the same as banknotes. Bots spread more quickly than paper money, are easier to create, and tend to harm individuals rather than institutions such as central banks. And artists might argue that the right to freely create bots is part of freedom of expression.
But the important takeaway from financial history is that it is possible to create a cultural framework that criminalizes counterfeiting. Of course, this doesn't solve all of the online deepfake problems. But it may help deter some people from taking action in a critical election year.
And, as Harari points out, looking at the world of money emphasizes a different point. Regardless of investor hype or political concerns, AI should always be viewed and treated as if it were in a class of its own. Counterfeiting can occur in a variety of technologies.
So let's hope Congress passes anti-bot laws and the EU accelerates regulation. But I would also like to hope that technology companies and policymakers can take some lessons from the world of money. Perhaps we all need to revisit the story of Franklin and his 18th century ink.
gillian.tett@ft.com
