Compliance teams at Investment Banking firms working on the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI, 2012) are increasingly relying on AI to scope third-party oversight programmes for CSP relationships under an FMI mandate, complete PFMI disclosure-framework responses and self-assessments, draft committee-mandate language for board submissions, and verify governance-arrangement claims against the regulator-issued Key Consideration text. The PFMI framework is the global standard for systemically important payment systems, central counterparties, and securities settlement infrastructures, and the document's structure makes it particularly amenable to AI summarisation: numbered Principles, numbered Key Considerations, and lettered annexes that the model can address by number.
That surface structure is also what makes the failure mode the RegLeg Brief Specialist Panel records here invisible at runtime: the document is regularly cited by Key Consideration number in board papers, disclosure-framework returns, and counterparty representations, which means a misattributed citation does not register as a substantive error in the draft, it registers as a competent regulatory paragraph that the reader will not check against the regulator's primary text unless something else prompts the verification.
Two frontier AI models tested by the RegLeg Brief Specialist Panel produced confidently wrong reconstructions of the PFMI's governance and oversight architecture under Principle 2 (governance) and Annex F (oversight expectations for critical service providers). The Panel records two findings in the class the team labels "Source-Credit Fabrication and Supervisor-Scope Inversion", in which the models stated a substantively plausible governance position and pinned it to a named Key Consideration that the published PFMI text does not support. The finding identifiers are RLB-H-INT-BIS-CPMI-IOSCO-PFMI-2012-Q011-Sonnet46, RLB-H-INT-BIS-CPMI-IOSCO-PFMI-2012-Q022-Opus47.
For Compliance teams at Investment Banking firms, the failure shape matters because the work product is disclosure-framework returns, self-assessment responses, CSP-oversight policies, third-party risk-management procedures, and committee-mandate submissions to the board, all of which travel under the firm's name to a board, supervisor, counterparty, or public reviewer who can locate the cited Key Consideration and check it against the regulator's primary text.
Compliance teams at investment banks signing off on a disclosure-framework return or a self-assessment response are the population most exposed when AI output embeds a fabricated Key Consideration or inverts a supervisor's scope, because the document goes to a national authority or the FSB-coordinated monitoring review and will be cross-checked against the regulator's primary text.
The Panel documents the finding identifiers RLB-H-INT-BIS-CPMI-IOSCO-PFMI-2012-Q011-Sonnet46; RLB-H-INT-BIS-CPMI-IOSCO-PFMI-2012-Q022-Opus47. The AI subjects under test were Claude Opus 4.7 and Claude Sonnet 4.6, each running with web search enabled, mirroring the workflow most practitioners run when they ask an assistant a Principle 2 or Annex F question. The verbatim regulator text is held as primary substrate (R2-REGULATION-d101a_PFMI_main_text.pdf). Each finding card sets out the exact strings the model produced, the verbatim regulator excerpt the model's output contradicts, and the failure-class label the RegLeg Brief Specialist Panel assigns.
The records are open-access; AI labs named in any finding have an unconditional right of reply, and the Specialist Panel will document any factual correction or contextual response alongside the original finding.
This is the consolidated view of findings. Click the Citation IDs or 'see details →' on any item for the full details for each finding.
For Compliance teams at Investment Banking firms teams scoping CSP oversight under an FMI mandate, this inversion would lead to a third-party risk programme that addresses the FMI's contractual flow-down only and never contemplates direct regulator engagement with the CSP. Annex F's actual scope means a supervisor can address expectations directly to a CSP, a fact that changes how the firm scopes regulator liaison, escalation, and remediation obligations for outsourced services to the FMI's CSP chain.
For Compliance teams at Investment Banking firms teams completing PFMI disclosure-framework responses or self-assessments, this output would embed a non-existent KC 6 obligation into the firm's stated compliance position. The disclosure-framework methodology audits the firm's self-described compliance against the actual KC text; a self-assessment that asserts compliance with a fabricated requirement is internally incoherent and creates exposure in a Level 2 or Level 3 monitoring review by national authorities or the FSB.
Every finding on this page compares an AI subject's account of the rule against the regulator's verbatim text from the regulator's own portal. Both are linked. Each delta, its root causes, and impact analysis are documented and published with immutable Citation IDs.