Federal Reserve Governor Christopher Waller said artificial intelligence could change how cross-border payments are processed and enable AI agents to initiate small-value payments between consumers, businesses and even machines. For payment firms, the technology could lower processing costs and improve transaction screening, but it also raises new questions about identity verification, liability and cybersecurity. Existing rules may need to adapt.
Waller made the remarks on Tuesday afternoon at Sibos 2026, a payments conference in Miami hosted by the Society for Worldwide Interbank Financial Telecommunication, or SWIFT. As one of the Federal Reserve officials responsible for payments, Waller said advances in large language models and their ability to act autonomously warrant close attention, alongside updated policies and operating standards.
AI could reduce false positives in cross-border screening
Waller said large language models can interpret context and could be used to improve sanctions screening and anti-money-laundering systems. The technology may help payment firms identify illicit transactions more effectively while reducing the number of legitimate payments blocked by mistake.
He noted that research has shown AI can materially reduce false positives in suspicious-activity monitoring. That could allow institutions to direct more resources toward investigating complex, higher-risk cases and help legitimate transactions move through the system with fewer interruptions. In cross-border payments, screening accuracy affects processing speed as well as how firms allocate compliance resources.
Payment routing is another potential use. Cross-border transactions require trade-offs among cost, speed and reliability, while also involving currency conversion and liquidity management. Waller said AI agents equipped with appropriate data and decision criteria could handle these complex optimization problems more effectively.
Agent-led payments change the identity question
Waller said AI agents could take part in several types of payment activity, including retail transactions initiated by consumers, payments made by an agent with the consumer's authorization, and business-to-business transfers. When AI systems query online databases, they could also generate small machine-to-machine payments.
These applications may improve productivity, but they also change the central question in payment verification. Traditional processes largely focus on confirming whether the buyer is an authorized payer. With agent-led payments, firms would also need to establish whether the AI agent has been authorized, the scope of that authorization and who is responsible once a transaction takes place.
Waller said new forms of identity verification will be essential. Fraud risk and the allocation of liability will also need to be built into payment-system design. He did not endorse a specific regulatory or supervisory measure in his speech. Instead, he said existing frameworks, including those governing liability in e-commerce, could be adjusted for new use cases, while new approaches could be tested and refined.
Cyberattacks remain an asymmetric risk
Waller said AI could increase both the volume and sophistication of cyberattacks, making the concern more than theoretical. Payment firms can also use AI to defend against attacks, but the two sides are not evenly matched: an attacker may need to find only one critical vulnerability, while payment-system operators and service providers must protect broad networks of systems and services.
That imbalance calls for a cautious approach to AI adoption, Waller said, with the technology also directed toward strengthening payment security. He did not propose a specific regulatory framework but stressed that payment innovation must be balanced against security, integrity and stability, which underpin public confidence in the payments system.
As AI agents begin to handle tasks such as initiating transactions and routing payments, financial institutions and regulators will have to address more than efficiency. Authorization checks, liability, fraud controls and system protection will all require attention. Waller's speech did not specify which new rules might be introduced, leaving the details to further discussion among the industry and regulators.