Central South Dakota News

U.S. Senators Mike Rounds (R-S.D.) and Martin Heinrich (D-N.M.), along with U.S. Representatives French Hill (R-Ark.) and Ritchie Torres (D-N.Y.), have introduced bipartisan, bicameral legislation aimed at promoting artificial intelligence (AI) innovation in the financial services industry. The Unleashing AI Innovation in Financial Services Act seeks to establish regulatory sandboxes within financial regulatory agencies, allowing regulated entities to test AI projects in a controlled environment.

"The financial services industry has been using AI for decades, but as major advancements in the technology emerge, companies must be able to innovate," said Rounds. "The Unleashing AI Innovation in Financial Services Act is designed to foster innovation and economic growth by providing a controlled environment where new financial products and services that use AI can be tested. By creating these sandboxes, we aim to strike a balance between encouraging innovation and maintaining consumer protection, ultimately strengthening our financial system and keeping our country at the forefront of global financial technology."

"To unlock AI’s full potential and ensure it is deployed responsibly, we need regulatory guardrails that are informed by real-life use cases," said Heinrich. "The Unleashing AI Innovation in Financial Services Act will enable the private sector and government agencies to work together—encouraging innovation that protects consumers in the financial services sector."

"AI is a rapidly advancing tool that we need to fully understand because it is going to impact every aspect of our lives," said Hill. "The Unleashing AI Innovation Financial Services Act would ensure our federal agencies allow for the companies they regulate to experiment with AI in regulatory sandboxes. This is a pivotal step to allow both government and the private sector to collaborate and learn together, as the U.S. must lead in the development and use of AI technology."

"As emerging technologies drive immense change within the financial sector, there is always the question of how to balance innovation with consumer protection," said Torres. "That is why I am proud to support the bipartisan Unleashing AI Innovation in Financial Services Act, which will encourage the use of new AI technology in the financial services sector while maintaining regulations that protect the public."

The legislation establishes regulatory sandboxes for AI test projects at several key agencies including: Federal Reserve, Office of the Comptroller of Currency (OCC), Federal Deposit Insurance Corporation (FDIC), Securities Exchange Commission (SEC), Consumer Financial Protection Bureau (CFPB), National Credit Union Administration (NCUA), and Federal Housing Finance Agency (FHFA). Regulated entities must apply through their primary regulator demonstrating that their project serves public interest, enhances efficiency or competitiveness without posing systemic risks.

Click HERE to read full bill text.