Unleashing AI Innovation in Financial Services Act

Key Points

• The bill requires every major financial regulator (the Fed, FDIC, SEC, CFPB, NCUA, OCC, and FHFA) to create or designate an AI Innovation Lab. These labs let banks, brokers, and other regulated companies test AI-powered products and services under relaxed rules.
• Companies can apply to have specific regulations waived or changed while they test their AI tools. Their application must propose an alternative way to comply with the rules and explain why the change is needed for the project to work.
• To get approved, companies must show their AI project serves the public interest, does not pose a systemic risk to the financial system, does not threaten national security, and follows anti-money laundering laws.
• While an AI test project is active, the regulator that approved it can only enforce rules according to the alternative compliance plan. Other regulators generally cannot enforce the waived rule at all during the test period.
• Regulators get 120 days to review applications and can extend by another 120 days. If no decision is made after that, the application is automatically approved. This auto-approval mechanism is designed to prevent bureaucratic delays from stalling innovation.
• Agencies must write formal rules within 180 days of enactment and report annually to Congress on outcomes. AI test projects must last at least one year, and agencies retain the power to go after fraud no matter what.