119-s2528

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2528 Introduced in Senate

    (IS) ]

<DOC>

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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