No CRS summary available for this bill.
This section defines eight terms for purposes of this division, including (1) "AI test project" as a financial product or service under the jurisdiction of a financial regulatory agency that makes substantial use of artificial intelligence and is or may be subject to federal regulation or statute; (2) "appropriate financial regulatory agency," encompassing the appropriate Federal banking agency, SEC (for securities entities), CFPB (for covered persons), NCUA (for insured credit unions), and FHFA (for Federal Home Loan Banks, Fannie Mae, and Freddie Mac); (3) "artificial intelligence" or "AI," as defined in the National Artificial Intelligence Initiative Act of 2020; (4) "Commission" as the Securities and Exchange Commission; (5) "Federal securities laws," listing specified securities statutes; (6) "financial product or service," incorporating definitions from the Consumer Financial Protection Act (excluding insurance); (7) "financial regulatory agency," listing the Federal Reserve, FDIC, OCC, SEC, CFPB, NCUA, and FHFA; and (8) "regulated entity" as an entity regulated by any financial regulatory agency.
This section directs each financial regulatory agency to establish or designate an AI Innovation Lab to enable regulated entities to experiment with AI test projects using approved alternative compliance strategies that waive or modify regulations, without unnecessary regulation or enforcement actions during the approved period. Regulated entities may submit applications—including a project description, proposed waiver or modification of a specific regulation with an alternative strategy, demonstrations of public interest benefits (e.g., improved access or efficiency), absence of systemic or national security risks and consistency with anti-money laundering requirements, a termination date, size/scope limitations, business plan, and economic impact estimate—which the agency must review and approve or deny within 120 days if more likely than not meeting the criteria. (Joint applications and those affecting other agencies' regulations are permitted with joint approval; multi-agency regulated entities must notify other regulators within 5 business days.) Upon approval, enforcement of the specified regulation follows only the alternative strategy until the termination date, and other agencies may not enforce it (except as potentially provided for other agencies).