Your Regulator Isn't the SEC. Your Risk Is Bigger Than You Think.
- 3 hours ago
- 1 min read
O'Connell, J. (2026, June 1). Your regulator isn't the SEC. Your risk is bigger than you think. The Oasis Group. https://theoasisgrp.com/peaks-perspective/your-regulator-isnt-the-sec-your-risk-is-bigger-than-you-think/
Trust organizations are deploying AI across investment analysis, beneficiary communications, and trust accounting without building the corresponding governance infrastructure.
Trust companies are held to the prudent investor standard rather than a regulatory checklist, which raises the consequences of AI use that leaves no documentation trail.
Federally chartered trust companies fall under the Office of the Comptroller of the Currency, whose model risk management guidance (Bulletin 2011-12, updated 2021) already applies to AI tools without new rulemaking.
State-chartered trust companies face accelerating technology risk expectations, with New York issuing AI risk management guidance in 2026 and California and Massachusetts following.
The prudent investor standard attaches to AI tool selection, model validation, and documentation, and a vendor's terms of service do not transfer the trustee's fiduciary liability.
A trust-specific AI governance program must include an AI tool inventory, an acceptable use policy, decision documentation, vendor oversight, and trustee training.
The trust industry has been largely absent from AI governance frameworks built for RIAs and broker-dealers, leaving firms exposed to liability that no insurance policy fully covers.
Knote: I love the Trust bank angle here. The brainiacs over at Oasis are always thinking around the corner!