Banking and Finance Law Daily Wrap Up, FINANCIAL TECHNOLOGY—Treasury releases AI lexicon and sector-specific risk framework for financial services institutions, (Feb 20, 2026)
Organizations Mentioned:Secretary of the Treasury | U.S. Department of the Treasury
By Shashi Kant, BALLB, LLM.
Two industry-developed resources set common terminology and a control-objective structure intended to support AI oversight across financial institutions.
The U.S. Department of the Treasury announced the release of two resources intended to guide the use of artificial intelligence in the financial sector: an Artificial Intelligence Lexicon and a Financial Services AI Risk Management Framework. The press release describes the resources as part of work to support implementation of the President’s AI Action Plan and states that the materials are intended for financial institutions, regulators, technology providers, and other stakeholders involved in AI governance.
The press release identifies Derek Theurer, performing the duties of Deputy Secretary of the Treasury, as stating that implementing the AI Action Plan requires practical tools, and that a shared AI “language” and a risk management framework tailored to financial services are intended to help institutions adopt AI while protecting consumers. Treasury also identifies Paras Malik, Treasury’s Chief Artificial Intelligence Officer, as stating that clear terminology and practical risk management approaches are intended to support AI adoption and oversight in financial services.
Development of resources. The press release states that the AI Lexicon and the Financial Services AI Risk Management Framework were developed through the Financial Services Sector Coordinating Council’s Artificial Intelligence Executive Oversight Group (AIEOG) and in coordination with the Financial and Banking Information Infrastructure Committee. An AIEOG deliverables document on the FSSCC site describes the AIEOG as a forum for developing “AI deliverables” for financial services and lists the Lexicon and the risk management framework among the group’s publications.
The Treasury release follows broader federal initiatives addressing artificial intelligence policy, including publication of an Administration AI Action Plan outlining federal priorities for AI governance and sectoral implementation (see Banking and Finance Law Daily, July 24, 2025).
AI Lexicon. Treasury’s press release presents the Lexicon as a tool intended to address inconsistent or fragmented AI terminology that can complicate governance, oversight, and cross-functional communication inside financial institutions. The Lexicon document itself is presented as a common set of definitions intended to support shared understanding of AI terms among stakeholders with different roles, including technical, business, legal, compliance, and supervisory audiences. The Lexicon includes definitions and terminology intended to distinguish between concepts such as AI systems, machine learning, model development, deployment, and monitoring, and it identifies categories intended to help institutions describe AI use cases and related risk considerations in a consistent way.
The Lexicon frames its definitions as intended to support governance functions such as documentation, internal approvals, risk assessments, and controls mapping by ensuring that teams refer to the same concepts in the same way. The document also positions standardized terminology as relevant to external engagement, including interactions with supervisors, auditors, vendors, and other third parties.
Financial Services AI Risk Management Framework. Treasury’s press release describes the Financial Services AI Risk Management Framework (FS AI RMF) as a sector-specific resource intended to help financial institutions manage risks associated with AI use throughout the AI lifecycle. A separate overview document for the FS AI RMF describes it as an industry-led framework that is aligned with the National Institute of Standards and Technology (NIST) AI Risk Management Framework and tailored to financial services risk profiles and compliance environments. The overview document states that the framework was developed through public-private collaboration involving more than 100 financial institutions and with input from U.S. and international agencies, including NIST. The FS AI RMF overview describes the framework as including 230 “control objectives,” presented as tools for institutions to map AI risks to governance measures and evidence, and as a structure intended to support benchmarking and consistency across organizations and vendors. The same document explains that the framework is intended to be scalable across different types and sizes of financial organizations, and it lists intended users that include banks, credit unions, insurers, investment firms, payment firms, and third-party technology providers, as well as internal functions such as risk, compliance, legal, audit, and AI product teams.
Framework components. The FS AI RMF overview describes several components intended to support implementation. These include an AI Adoption Stage Questionnaire; a Risk and Control Matrix containing the 230 control objectives organized by adoption stage; a Guidebook with implementation guidance; and a Control Objective Reference Guide with examples of controls and supporting evidence. The document presents the framework as a method to translate AI governance expectations into controls and documentation practices that can be integrated into existing enterprise risk and compliance programs. The FS AI RMF overview also describes alignment with NIST’s structure as intended to support harmonized adoption and to help firms demonstrate governance practices in a manner that is comparable across institutions and, where relevant, across jurisdictions.
Statements from participating organizations. Treasury’s press release identifies Josh Magri, CEO of the Cyber Risk Institute, as stating that the FS AI RMF aligns with NIST standards and provides guidance tailored to varying stages of AI adoption in financial services. The press release also states that Treasury will continue engaging with federal and state regulators, industry participants, and other stakeholders on AI adoption and oversight in the financial system.
RegulatoryActivity: AINews FinTech GCNNews