On August 12, 2024, the Center for American Progress and Governing for Impact (GFI) submitted a comment to the U.S. Department of Treasury regarding its request for information on “Uses, Opportunities, and Risks of Artificial Intelligence in the Financial Services Sector” (89 FR 50048). CAP and GFI’s official comment can be viewed here and is now available in the public record here.
In June 2024, CAP and GFI released a report, “Taking Further Agency Action on AI: How Agencies Can Deploy Existing Statutory Authorities To Regulate Artificial Intelligence,” focusing on the existing statutory authorities that federal agencies can use to regulate the risks and opportunities from artificial intelligence (AI). The report examines numerous existing statutory authorities and makes more than 80 recommendations for agency actions. Chapter 5 of the report, “Financial Regulatory Agencies,” identifies 11 existing statutory authorities that allow financial services regulators to address the risks of AI and is the primary source referenced throughout the RFI response.
The comment highlights various potential risks associated with the use of AI in the financial sector:
- Prevention of access to financial services
- Algorithmic discrimination that may exacerbate historical inequalities
- AI-enabled fraud
- Failure to comply with anti-money laundering requirements
- Threats to safe, secure, and stable financial systems
CAP and GFI propose recommendations that attempt to establish the same core set of regulatory mechanisms wherever possible across the financial sector, such as minimum risk management practice, AI audits, and human review. Additionally, the comment outlines organization-specific recommendations for the Treasury and other financial regulatory agencies, such as the Commodity Futures Trading Commission, the Securities and Exchange Commission, and the Consumer Financial Protection Bureau.
Agencies cannot and should not wait to utilize existing authorities to address AI, especially in financial services. These regulatory recommendations are a step toward necessary oversight of those use cases.
Click here to read CAP and GFI’s full comment letter.