On August 27, U.S. Senator Mike Rounds (R-SD) introduced the “Unleashing AI Innovation in Financial Services Act” (S. 4951), a bill aimed at fostering artificial intelligence (AI) innovation within the financial services industry. According to his press release, this legislation is part of a broader set of five bipartisan AI bills that Senator Rounds has released for consideration by Congress this fall.
The Unleashing AI Innovation in Financial Services Act seeks to establish regulatory sandboxes for regulated financial entities to conduct limited experimentation with novel products that may not align perfectly with existing laws. These sandboxes, which have precedence at the state level, will allow financial firms to test AI-driven projects without the fear of undue regulation or retroactive enforcement actions. The bill outlines a structured application process where firms can request modifications or waivers of specific regulations and propose alternative methods for compliance.
To qualify for participation, companies must demonstrate that their AI projects do not pose a systemic risk to the U.S. financial system and that they comply with anti-money laundering laws. The covered agencies under this bill include major financial regulatory bodies such as the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Consumer Financial Protection Bureau, National Credit Union Administration, Securities and Exchange Commission, and Federal Housing Finance Agency.
The Rounds legislation bundle is in addition to 10 AI-related bills that were advanced to the Senate this summer by the Committee on Commerce, Science, and Transportation. With less than 10 weeks left in the current Congressional session, we will continue to monitor the progress of AI legislation.
