On November 4, 2026, the Alabama State Banking Department issued a letter to chief executive officers of Alabama state-chartered banks and trust companies describing how it plans to incorporate the Conference of State Bank Supervisors’ (CSBS) AI Supervisory Framework into scheduled examinations beginning in 2027. The CSBS framework is intended to help examiners and regulated institutions assess AI use through a risk-based approach.
The Department’s letter explains that the framework does not create new reporting obligations or supervisory requirements and is not a mandatory checklist. Its application will depend on each institution’s size, complexity, risk profile, and extent of AI use. The framework includes an examiner guide and work program, supplements addressing nonbank AI risks, and an optional worksheet for assessing individual AI use cases.
Beginning in 2027, Alabama state-chartered banks and trust companies should expect examiners to ask about their AI practices. The letter states that examination scope may expand based on an institution’s size, complexity, risk profile, and AI adoption. Specifically, the framework:
- Supports examination scoping. The Core Examiner Guide includes questions to identify an institution’s AI use, a document request list, examination procedures, and routing directions.
- Addresses AI-related risks. The materials include nonbank supplements covering third-party and vendor risks, model risk, and consumer protection, as well as an optional tool for assessing individual AI use cases.
- Encourages governance review. The department recommends that institutions assess their AI governance practices, policies, and inventories against the framework’s scoping areas and prepare to discuss AI use during examinations.