Bipartisan Legislation Would Allow Financial Regulators to Experiment with AI

A bipartisan group of lawmakers proposed legislation to establish "regulatory sandboxes" that would allow financial regulators to "experiment with AI test projects" under a controlled environment. (See Senate version and House version.)

The bill would require sandboxes to be set up at the CFPB, the FDIC, the Federal Reserve, the FHFA, the NCUA, the OCC and the SEC.

The proposed legislation states that "a regulated entity may submit to the appropriate financial regulatory agency an application, on a form determined by the appropriate financial regulatory agency, to engage in an AI test project." An application must include: (i) "a description of the AI test project proposed to be carried out by the regulated entity;" (ii) "an alternative compliance strategy;" (iii) a demonstration that the strategy would serve the public interest, foster innovation and would not present risks; (iv) a project termination date; (v) size, scope and growth limitations; and (vi) estimated economic impact of the project. 

Representatives French Hill (R-Ark.) and Ritchie Torres (D-N.Y.) sponsored the bill in the House. Senators Mike Rounds (R-S.D.) and Martin Heinrich (D-N.M.); Senate Majority Leader Charles E. Schumer (D-N.Y.); and Senator Todd Young (R-Ind.) sponsored the bill in the Senate.