The American Fintech Council is urging lawmakers to support a bill by Sen. Mike Rounds (R-SD) and House Financial Services Chairman French Hill (R-IN) directing financial regulatory agencies to stand up AI “innovation labs” that would spur “responsible innovation while preserving strong consumer protections.”
“AFC has long championed a balanced approach to AI in financial services, one that allows innovative technology to flourish while upholding rigorous safeguards for consumers,” AFC CEO Phil Goldfeder said in an Aug. 13 release flagging the group’s letter to members of Congress.
“By creating clear rules of the road and giving both regulators and companies a safe environment to responsibly innovate around AI, this legislation charts the right course forward. It’s a pragmatic win for financial inclusion, competition, and American global leadership,” Goldfeder said.
AFC in the release said, “The bill’s establishment of AI innovation labs is well aligned with the White House’s AI Action Plan and AFC’s own recommendations to the Treasury Department last year. The proposal reflects AFC’s policy principles by encouraging public-private collaboration, eliminating regulatory fragmentation, and ensuring new technologies are evaluated with appropriate risk management and transparency.”
The group is a “standards-based organization” representing major fin-tech companies and banks.
Rounds and Hill, and a roster of cosponsors, reintroduced the bill in July. The legislation says, “Each financial regulatory agency shall establish, or identify an office, division, or department of the agency that shall serve as, an AI Innovation Lab to enable regulated entities to experiment with AI test projects without unnecessary or unduly burdensome regulation or expectation of enforcement actions.”
The 21-page bill details the requirements for applications by regulated entities, including how the AI test project “would serve the public interest, improve consumer or investor access to a financial product or service, or promote consumer or investor protection”; how it would “enhance efficiency or operations, foster innovation or competitiveness, improve risk management and security, or enhance regulatory compliance”; and that it “would not present a systemic risk to the financial system of the United States.”
The bill says “the appropriate financial regulatory agency” must review and act upon applications within 120 days. “If the applicant shows that it is more likely than not that the application meets the requirements for establishing an alternative compliance strategy and satisfies the standards described in subclauses (II) and (III) of subparagraph (A)(ii), the agency shall approve the application,” it says.