Unleashing AI Innovation in Financial Services Act

This bill sets up AI Innovation Labs at federal financial regulators so financial companies they oversee can test AI tools in a controlled way. Companies apply with a clear test plan and a custom way to follow the rules. If approved, the regulator enforces the rules only as laid out in that plan, and other regulators can’t step in unless they jointly agreed. The goal is to spark new ideas while protecting consumers, investors, and markets. Agencies must keep any project data they receive secure.

Regulators have 120 days to decide on an application; they can take one extra 120-day extension. If there’s still no decision after that, the application is automatically approved. If an application is denied, the agency must explain why in writing, and it must wait 30 days before taking any enforcement related to that proposed test. Regulators can still go to court to stop a test that threatens consumers, markets, deposit insurance funds, anti–money laundering rules, or national security, and they can always act on fraud or unsafe practices.

Key points

• Who is affected: Financial companies overseen by federal financial regulators; consumers and investors who could see better access and protections from new tools.
• What changes: Applications must show public benefits, no systemic risk, no national security risk, and compliance with anti–money laundering rules; include limits on size and growth, a business plan, and an economic impact estimate. Joint applications and cross-agency approvals are allowed when rules from more than one regulator are involved.
• When: Agencies must issue implementing rules within 180 days (including how to modify tests, confidentiality, consequences for breaking the plan, and a minimum 1-year test duration with ways to extend). Agencies must report aggregated results to Congress within 2 years and then yearly for 7 years; reports cannot name companies or reveal confidential business info. If a company is overseen by multiple regulators, it must notify all of them within 5 business days of applying.