[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2528 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 2528
To establish AI Innovation Labs that permit certain persons to
experiment with artificial intelligence without expectation of
enforcement actions.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 29, 2025
Mr. Rounds (for himself, Mr. Heinrich, Mr. Tillis, and Mr. Kim)
introduced the following bill; which was read twice and referred to the
Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To establish AI Innovation Labs that permit certain persons to
experiment with artificial intelligence without expectation of
enforcement actions.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Unleashing AI Innovation in
Financial Services Act''.
SEC. 2. DEFINITIONS.
(1) AI test project.--The term ``AI test project'' means a
financial product or service that--
(A) falls under the jurisdiction of a financial
regulatory agency;
(B) makes substantial use of artificial
intelligence; and
(C) is, or may be, subject to a Federal regulation
or Federal statute.
(2) Appropriate financial regulatory agency.--The term
``appropriate financial regulatory agency'' means--
(A) the appropriate Federal banking agency, as
defined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813), with respect to an institution
described in subsection (q) of that section;
(B) the Securities and Exchange Commission, with
respect to an institution not described in subparagraph
(A) that is--
(i) any broker or dealer that is registered
with the Commission under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.);
(ii) any investment company that is
registered with the Commission under the
Investment Company Act of 1940 (15 U.S.C. 80a-1
et seq.);
(iii) any investment adviser that is
registered with the Commission under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-
1 et seq.);
(iv) any clearing agency registered with
the Commission under the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.);
(v) any nationally recognized statistical
rating organization registered with the
Commission under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.);
(vi) any transfer agent registered with the
Commission under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.);
(vii) any exchange registered as a national
securities exchange with the Commission under
the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.);
(viii) any national securities association
registered with the Commission under the
Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.);
(ix) any securities information processor
registered with the Commission under the
Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.);
(x) the Municipal Securities Rulemaking
Board established under the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.);
(xi) the Public Company Accounting
Oversight Board established under the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7211 et seq.);
(xii) the Securities Investor Protection
Corporation established under the Securities
Investor Protection Act of 1970 (15 U.S.C.
78aaa et seq.); and
(xiii) any security-based swap execution
facility, security-based swap data repository,
security-based swap dealer, or major security-
based swap participant registered with the
Commission under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.), with respect to
the security-based swap activities of the
person that require such person to be
registered under such Act;
(C) the Bureau of Consumer Financial Protection,
with respect to a covered person, as defined in section
1002 of the Consumer Financial Protection Act of 2010
(12 U.S.C. 5481), that does not have an appropriate
financial regulatory agency under subparagraph (A),
(B), (D), or (E) of this paragraph;
(D) the National Credit Union Administration, with
respect to an insured credit union, as defined in
section 101 of the Federal Credit Union Act (12 U.S.C.
1752); and
(E) the Federal Housing Finance Agency, with
respect to--
(i) a Federal Home Loan Bank;
(ii) the Federal Home Loan Bank System;
(iii) the Federal National Mortgage
Association; and
(iv) the Federal Home Loan Mortgage
Corporation.
(3) Artificial intelligence; ai.--The terms ``artificial
intelligence'' and ``AI'' have the meaning given the term
``artificial intelligence'' in section 5002 of the National
Artificial Intelligence Initiative Act of 2020 (15 U.S.C.
9401).
(4) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
(5) Federal securities laws.--The term ``Federal securities
laws'' means--
(A) the Securities Act of 1933 (15 U.S.C. 77a et
seq.);
(B) the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.);
(C) the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201
et seq.);
(D) the Trust Indenture Act of 1939 (15 U.S.C.
77aaa et seq.);
(E) the Investment Company Act of 1940 (15 U.S.C.
80a-1 et seq.);
(F) the Investment Advisers Act of 1940 (15 U.S.C.
80b-1 et seq.);
(G) the Jumpstart Our Business Startup Act (Public
Law 112-106; 126 Stat. 306); and
(H) the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Public Law 111-203; 124 Stat. 1376).
(6) Financial product or service.--The term ``financial
product or service''--
(A) has the meaning given the term in section 1002
of the Consumer Financial Protection Act of 2010 (12
U.S.C. 5481);
(B) includes--
(i) activities that are financial in
nature, as defined in section 4(k)(4) of the
Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)(4));
(ii) any financial product or service
provided by a person regulated by the
Commission, as defined in section 1002 of the
Consumer Financial Protection Act of 2010 (12
U.S.C. 5481); and
(iii) includes the offer or sale of any
security subject to the Federal securities
laws; and
(C) does not include the business of insurance.
(7) Financial regulatory agency.--The term ``financial
regulatory agency'' means--
(A) the Board of Governors of the Federal Reserve
System;
(B) the Federal Deposit Insurance Corporation;
(C) the Office of the Comptroller of the Currency;
(D) the Securities and Exchange Commission;
(E) the Bureau of Consumer Financial Protection;
(F) the National Credit Union Administration; and
(G) the Federal Housing Finance Agency.
(8) Regulated entity.--The term ``regulated entity'' means
an entity regulated by any financial regulatory agency.
SEC. 3. USE OF ARTIFICIAL INTELLIGENCE BY REGULATED FINANCIAL ENTITIES.
(a) AI Innovation Labs.--
(1) Establishment.--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, pursuant to the approval of an application
under paragraph (2).
(2) Applications.--
(A) Submission.--
(i) In general.--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 through the AI
Innovation Lab established or identified under
paragraph (1).
(ii) Contents.--An application submitted
under clause (i) shall include--
(I) a description of the AI test
project proposed to be carried out by
the regulated entity;
(II) an alternative compliance
strategy that--
(aa) identifies a
regulation issued by the
appropriate financial
regulatory agency that the
regulated entity requests to be
waived or modified; and
(bb) proposes an
alternative method for the
regulated entity to comply with
the regulation, including an
explanation as to why the
alternative method is essential
to the operation of the entity
and how the regulated entity
would effectively manage risks
associated with the AI test
project;
(III) an explanation of how under
the strategy described in subclause
(II), the AI test project--
(aa) would serve the public
interest, improve consumer or
investor access to a financial
product or service, or promote
consumer or investor
protection;
(bb) would enhance
efficiency or operations,
foster innovation or
competitiveness, improve risk
management and security, or
enhance regulatory compliance;
(cc) would not present a
systemic risk to the financial
system of the United States;
(dd) is consistent with the
purposes of the anti-money
laundering and countering the
financing of terrorism
obligations under subchapter II
of chapter 53 of title 31,
United States Code; and
(ee) would not present a
national security risk to the
United States;
(IV) a proposed date on which the
AI test project would terminate and an
explanation why such termination date
would be appropriate;
(V) proposed limitations on the
size, scope, and growth of the AI test
project;
(VI) a detailed business plan; and
(VII) an estimate of the economic
impact of the AI test project if
approved.
(iii) Joint applications.--Two or more
regulated entities may submit a joint
application to the same financial regulatory
agency under clause (i).
(iv) Regulations of other agencies.--
(I) In general.--A regulated entity
may submit an application under this
subparagraph that includes an
alternative compliance strategy for a
regulation issued or enforced by a
financial regulatory agency that is not
the appropriate financial regulatory
agency for the regulated entity.
(II) Requirements.--An application
described in subclause (I) shall be
subject to the same requirements as an
application described in clause (ii),
except that--
(aa) the regulated entity
shall submit the application to
the appropriate financial
regulatory agency and the
financial regulatory agency
that issued or enforces the
regulation that is the subject
of the alternative compliance
strategy; and
(bb) the AI test project
may not take effect unless the
appropriate financial
regulatory agency and any other
financial regulatory agency
that issued or enforces the
regulation that is the subject
of the alternative compliance
strategy jointly approve the
application using the process
described in subparagraph (B).
(v) Notice.--A regulated entity that is
regulated or supervised by more than 1
financial regulatory agency shall provide
notice of any application submitted to the
appropriate financial regulatory agency under
this section to each financial regulatory
agency by which it is regulated or supervised
not later than 5 business days after the entity
submits the application to the appropriate
financial regulatory agency.
(B) Agency review.--
(i) In general.--Except as provided in
clause (iv), not later than 120 days after the
date on which an application is submitted to
the appropriate financial regulatory agency
under subparagraph (A), the appropriate
financial regulatory agency shall--
(I) review the application; and
(II) submit to the applicant in
writing a determination of the agency.
(ii) Approval.--
(I) In general.--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 and notify the
applicant in writing of--
(aa) the regulation that is
the subject of the alternative
compliance strategy;
(bb) the terms of the
alternative compliance strategy
for the AI test project;
(cc) the date on which the
AI test project will terminate;
(dd) any limitations on the
size, scope, or growth of the
AI test project; and
(ee) any additional
limitations or conditions on
the AI test project, as
determined by the appropriate
financial regulatory agency.
(II) Effect of approval.--With
respect to an AI test project, except
as provided in subclause (III),
beginning on the date on which an
application submitted under
subparagraph (A) is approved and ending
on the date described in subclause
(I)(cc)--
(aa) the appropriate
financial regulatory agency may
enforce a regulation described
in subclause (I)(aa) only in
the manner set out in the
alternative compliance strategy
described in subclause (I)(bb);
and
(bb) a financial regulatory
agency that is not the
appropriate financial
regulatory agency may not
enforce a regulation described
in subclause (I)(aa).
(III) Enforcement by another
financial regulatory agency.--With
respect to an AI test project, a
financial regulatory agency other than
the appropriate financial regulatory
agency that approves an application
under subparagraph (A)(iv) may enforce
a regulation described in subclause
(I)(aa) if the alternative compliance
strategy described in subclause (I)(bb)
provides for enforcement by such
financial regulatory agency.
(IV) Rule of construction.--Nothing
in this clause may be construed to
limit the authority of a financial
regulatory agency to take an
enforcement action against a regulated
entity with respect to fraud or for
engaging in an unsafe or unsound
practice relating to an AI test
project.
(iii) Denial.--
(I) In general.--If an agency
denies an application submitted under
subparagraph (A), the agency--
(aa) shall submit to the
applicant a written notice
explaining the reason for
denial; and
(bb) may not take an
enforcement action related to
the proposed AI test project
against the applicant earlier
than the date that is 30 days
after the date on which the
agency submits the written
notice described in item (aa).
(II) Resubmittals.--Each time an
application submitted under
subparagraph (A) is denied, the
regulated entity--
(aa) may submit an amended
application after receiving
feedback from the agency making
such denial; and
(bb) may not resubmit more
than 2 applications that are
substantially similar to the
denied application.
(III) Injunctive relief.--A
financial regulatory agency, by and
through its own attorneys, may file a
civil action in an appropriate United
States district court to enjoin an AI
test project if the agency determines
that the AI test project--
(aa) presents an immediate
danger to consumers or
investors; or
(bb) presents a risk--
(AA) to financial
markets;
(BB) in the case of
an AI test project
engaged in by an
insured depository
institution or an
insured credit union,
of loss to a Federal
deposit or share
insurance fund;
(CC) of a violation
of anti-money
laundering and
countering the
financing of terrorism
obligations under
subchapter II of
chapter 53 of title 31,
United States Code; or
(DD) to the
national security of
the United States.
(iv) Extension.--If the financial
regulatory agency needs additional time, the
agency may extend the approval deadline by 120
days. After the expiration of the 120-day
extension period, if the agency has not made a
determination on the application, the
application will automatically be deemed
approved and effective.
(C) Data security.--All data supplied by sponsors
of AI test projects to a financial regulatory agency
submitted under this section shall be stored and
maintained in a secure manner by the financial
regulatory agency, consistent with applicable data
security standards.
(D) Regulations.--Not later than 180 days after the
date of enactment of this Act, each financial
regulatory agency shall promulgate regulations that--
(i) shall be published in the Federal
Register and provide a 60-day period for public
notice and comment; and
(ii) include--
(I) procedures for modifying the AI
test projects that are approved by the
agency;
(II) consequences for failure to
comply with the terms of an alternative
compliance strategy;
(III) a requirement that an AI test
project will terminate not earlier than
1 year after the AI test project is
approved;
(IV) procedures to extend the
termination date described in subclause
(III);
(V) procedures for confidentiality;
and
(VI) procedures for coordinating
decisions relating to applications
submitted jointly by multiple regulated
entities or applications submitted to
more than one financial regulatory
agency.
(b) Report.--Not later than 2 years after the date of enactment of
this Act, and each year for 7 years thereafter, each financial
regulatory agency shall submit to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services
of the House of Representatives an annual report on the outcomes of AI
test projects. A report under this subsection may not include the names
of participating entities or any proprietary or confidential business
information. A report under this subsection shall include aggregated
findings, trends, and lessons learned from the AI test projects.
(c) Rule of Construction.--Nothing in this section may be construed
to limit the authority of a financial regulatory agency to take an
enforcement action against a regulated entity with respect to fraud
relating to an AI test project.
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