First in the Vault: A bipartisan group of members unveiled legislation that would direct federal financial regulators to create “regulatory sandboxes” for financial firms to experiment with artificial intelligence.
Led by Sens. Mike Rounds (R-S.D.) and Martin Heinrich (D-N.M.) plus Reps. French Hill (R-Ark.) and Ritchie Torres (D-N.Y.), the bill is titled the Unleashing AI Innovation in Financial Services Act.
Read the legislative text here.
The idea with regulatory sandboxes is allowing financial firms to do some limited experimentation with novel products that don’t fit neatly into existing consumer compliance law.
Sandboxes mostly exist at the state level, despite earlier congressional efforts to expand them nationally.
This sandbox bill from Rounds, Heinrich, Hill and Torres would allow firms to apply and “experiment with AI test projects without unnecessary or unduly burdensome regulation or expectation of retroactive enforcement actions.”
That application would let firms request that compliance with specific regulations be “waived or modified.” Companies could also propose an “alternative method” for complying with existing regulations.
Companies would need to demonstrate their project wouldn’t present a “systemic risk” to the U.S. financial system and comply with anti-money laundering laws.
The agencies covered include the Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Securities and Exchange Commission, Consumer Financial Protection Bureau, National Credit Union Administration and Federal Housing Finance Agency.
— Brendan Pedersen
