H.R. 4801

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4801 Reported in House (RH)]

<DOC>

Union Calendar No. 619
119th CONGRESS
2d Session
H. R. 4801

[Report No. 119-713]

To establish AI Innovation Labs that permit certain persons to 
experiment with artificial intelligence without expectation of 
enforcement actions.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

July 29, 2025

Mr. Hill of Arkansas (for himself, Mr. Torres of New York, Mr. Steil, 
and Mr. Gottheimer) introduced the following bill; which was referred 
to the Committee on Financial Services

June 24, 2026

Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed 
in italic]
[For text of introduced bill, see copy of bill as introduced on July 
29, 2025]

_______________________________________________________________________

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.

In this section:
(1) AI test project.--The term ``AI test project'' means a 
financial product, service, or activity--
(A) that falls under the jurisdiction of a 
financial regulatory agency;
(B) that makes substantial use of artificial 
intelligence;
(C) that is, or may be, subject to a Federal 
regulation or Federal statute; and
(D) for which a regulated entity submits an 
application for the waiver or modification of an 
applicable regulation subject to an alternative 
compliance strategy.
(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.);
(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, service, or activity.--The term 
``financial product, service, or activity''--
(A) includes--
(i) a financial product or service, as 
defined in section 1002 of the Consumer 
Financial Protection Act of 2010 (12 U.S.C. 
5481);
(ii) 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));
(iii) 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
(iv) the offer or sale of any security 
subject to the Federal securities laws;
(B) includes any internal activity of a regulated 
entity that is carried out in furtherance of the 
offering or sale of a product, service, or activity 
described in subparagraph (A); and
(C) does not include the business of insurance, as 
defined in section 1002 of the Consumer Financial 
Protection Act of 2010 (12 U.S.C. 5481).
(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, or insured in the case of a credit union, 
by any financial regulatory agency.

SEC. 3. AI INNOVATION LABS.

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, including enforcement actions that 
disincentivize the substantial use of artificial intelligence to 
enhance regulatory compliance practices, pursuant to the approval of an 
application under section 4.

SEC. 4. USE OF ARTIFICIAL INTELLIGENCE BY REGULATED FINANCIAL ENTITIES.

(a) Application Submission.--
(1) In general.--Beginning one year after the date of 
enactment of this Act, 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 an AI Innovation Lab.
(2) Contents.--An application submitted under paragraph (1) 
shall include--
(A) a description of the AI test project proposed 
to be carried out by the regulated entity, including--
(i) the type and capabilities of the 
relevant AI technologies, systems, and 
applications; and
(ii) the purposes and goals of the AI test 
project;
(B) an alternative compliance strategy that--
(i) identifies a regulation issued by a 
financial regulatory agency that the regulated 
entity requests to be waived or modified;
(ii) proposes an alternative method for the 
regulated entity to comply with the Federal 
statute under which the regulation identified 
in clause (i) is promulgated and the purpose of 
such regulation, including an explanation as to 
why the alternative method is essential to the 
operation of the regulated entity and how the 
regulated entity would effectively manage 
risks, including cybersecurity risks, 
associated with the AI test project;
(iii) describes applicable plans and 
policies related to risk assessments, testing, 
controls, documentation, and monitoring and 
their role in managing risks described under 
clause (ii); and
(iv) contains policies for the regulated 
entity to maintain, consistent with applicable 
law, cybersecurity standards, and contractual 
limitations and obligations, records of the 
activities of the AI test project, so long as 
such policies do not require the regulated 
entity to maintain any records that the 
regulated entity is not permitted to maintain 
pursuant to another law or any contractual 
limitation or obligation;
(C) an explanation of how under the strategy 
described in subparagraph (B), the AI test project--
(i) would serve the public interest, 
improve consumer or investor access to a 
financial product, service, or activity, or 
promote consumer or investor protection;
(ii) would enhance efficiency or 
operations, foster innovation or 
competitiveness, improve risk management and 
security, including cybersecurity, or enhance 
regulatory compliance;
(iii) would not present--
(I) a significant risk of loss to 
the Deposit Insurance Fund or the 
National Credit Union Share Insurance 
Fund where the regulated entity is an 
insured depository institution or 
insured credit union; or
(II) a systemic risk to the 
financial system of the United States;
(iv) 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
(v) would not present a national security 
risk to the United States;
(D) a proposed date on which the AI test project 
would terminate and an explanation why such termination 
date would be appropriate;
(E) proposed limitations on the size, scope, and 
growth of the AI test project;
(F) a detailed business plan; and
(G) an estimate of the economic, market, 
operational, and public interest impact of the AI test 
project if approved.
(3) Joint applications.--Two or more regulated entities may 
submit a joint application to the same financial regulatory 
agency under paragraph (2).
(4) Regulations of other agencies.--
(A) In general.--Notwithstanding paragraph (2), a 
regulated entity may submit an application under this 
subsection for 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.
(B) Requirements.--An application described in 
subparagraph (A) shall be subject to the same 
requirements as an application described in paragraph 
(2), except that--
(i) the regulated entity shall submit the 
application to--
(I) the appropriate financial 
regulatory agency; and
(II) any other financial regulatory 
agency that--
(aa) issued the regulation 
that is the subject of the 
alternative compliance strategy 
and has jurisdiction over the 
regulated entity with respect 
to such regulation; or
(bb) enforces the 
regulation that is the subject 
of the alternative compliance 
strategy with respect to the 
regulated entity; and
(ii) the AI test project may not take 
effect unless the application is jointly 
approved by--
(I) the appropriate financial 
regulatory agency; and
(II) each other financial 
regulatory agency described in clause 
(i)(II).
(5) Notice.--A regulated entity that is regulated by, or 
subject to regulations that are enforced 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 such financial regulatory 
agency not later than 5 business days after the regulated 
entity submits the application to the appropriate financial 
regulatory agency.
(6) Notice of intervening agency.--
(A) Notice of intervention.--A financial regulatory 
agency that receives a notice under paragraph (5) with 
respect to an application regarding a regulation that 
such agency issued or enforces may, within 30 days of 
receiving such notice, issue a notice of intervention 
to the regulated entity and the appropriate financial 
regulatory agency of such regulated entity.
(B) Joint approval required.--If a financial 
regulatory agency issues a notice of intervention 
described in subparagraph (A), the applicable AI test 
project may not take effect unless such financial 
regulatory agency, jointly with the financial 
regulatory agencies described in paragraph (4)(B)(ii), 
approves the application.
(7) Agency review.--
(A) In general.--Except as provided in subparagraph 
(D), not later than 120 days after the date on which a 
complete application is received by a financial 
regulatory agency under this subsection, the financial 
regulatory agency shall--
(i) review the application and assess, to 
the extent reasonably practicable, the 
applicant's ability to satisfy the standards 
described in subparagraphs (B) and (C) of 
paragraph (2); and
(ii) submit to the applicant in writing a 
determination of the agency.
(B) 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 
subparagraphs (B) and (C) of paragraph (2), the 
financial regulatory agency shall approve the 
application and notify the applicant in writing 
of--
(I) the regulation that is the 
subject of the alternative compliance 
strategy;
(II) the terms of the alternative 
compliance strategy for the AI test 
project;
(III) the date on which the AI test 
project will terminate;
(IV) any limitations on the size, 
scope, or growth of the AI test 
project; and
(V) any additional limitations or 
conditions on the AI test project, as 
determined by the financial regulatory 
agency.
(ii) Effect of approval.--With respect to 
an AI test project, beginning on the date on 
which an application submitted under paragraph 
(1) is approved and ending on the date 
described in clause (i)(III)--
(I) the appropriate financial 
regulatory agency may enforce a 
regulation described in clause (i)(I) 
only in the manner set out in the 
alternative compliance strategy 
described in clause (i)(II), subject to 
limitations or conditions described in 
subclauses (IV) and (V) of clause (i); 
and
(II) except as provided in clause 
(iii), a financial regulatory agency 
that is not the appropriate financial 
regulatory agency may not enforce a 
regulation described in clause (i)(I).
(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 may enforce a regulation described in 
clause (i)(I) if--
(I) such other financial regulatory 
agency issued or enforces such 
regulation;
(II) the approval of such other 
financial regulatory agency was 
required for the AI test project under 
paragraph (4)(B)(ii)(II) or (6)(B); and
(III) the alternative compliance 
strategy described in subclause clause 
(i)(II) provides for enforcement by 
such other financial regulatory agency.
(C) Denial, resubmittal, and relief.--
(i) In general.--If a financial regulatory 
agency denies an application, the financial 
regulatory agency--
(I) shall submit to the applicant a 
written notice explaining the reason 
for denial; and
(II) 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 financial regulatory 
agency submits such written notice.
(ii) Resubmittals.--Each time an 
application submitted under paragraph (1) is 
denied, the regulated entity--
(I) may submit an amended 
application after receiving feedback 
from the financial regulatory agency 
making such denial; and
(II) may not resubmit more than 2 
applications that are substantially 
similar to the denied application.
(iii) Injunctive relief.--Notwithstanding 
clause (i)(II), 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 active AI test 
project if the financial regulatory agency 
determines that the AI test project--
(I) presents an immediate danger to 
consumers or investors; or
(II) 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) Rule of construction on certain 
administrative orders.--Nothing in clause (iv) 
shall be construed to limit a financial 
regulatory agency's authority to issue an 
administrative order to cease the activity of 
an active AI test project where the agency 
determines such activity is causing unmitigable 
or irreparable harm to consumers, investors, or 
financial stability.
(D) Extension; failure to make a determination.--If 
a financial regulatory agency determines additional 
time is needed to make a determination on a complete 
application received under this subsection, the 
financial regulatory agency may extend the 120-day 
deadline by one additional 120-day period. If the 
financial regulatory agency does not approve or deny 
the application by the end of the initial 120-day 
period (or the 240-day period, in the case of 
extension), the financial regulatory agency shall be 
deemed to have approved the application.
(E) Additional information.--During the applicable 
120-day determination period (or the 240-day period, in 
the case of extension), a financial regulatory agency 
may request additional information from the regulated 
entity.
(F) Rule of construction on fraud and market 
manipulation authority.--Nothing in subparagraph (B) or 
(C) 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 market manipulation or for engaging in an unsafe or 
unsound practice.
(8) 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.
(9) Regulations.--Not later than 180 days after the date of 
enactment of this Act, each financial regulatory agency shall 
promulgate regulations implementing this Act that--
(A) shall be published in the Federal Register and 
provide a 60-day period for public notice and comment; 
and
(B) include--
(i) procedures for submitting applications 
for AI test projects and 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 include a specified termination date;
(iv) procedures to extend the termination 
date described in clause (iii) for a specified 
time period;
(v) requirements for regulated entities to 
report the status and progress of AI test 
projects at a frequency reasonably necessary 
for carrying out this Act and the rules 
promulgated thereunder;
(vi) requirements for regulated entities to 
make disclosures reasonably appropriate to 
inform consumers or investors regarding any 
direct interaction with an AI test project, 
which shall be tailored to the scale, scope, 
and risks thereof and describe the nature of 
the AI test project and its applicable 
alternative compliance strategy;
(vii) procedures for maintaining, as 
appropriate and consistent with applicable law, 
the confidentiality, security, and privacy of 
information;
(viii) consideration of the type and 
capabilities of proposed AI test projects' 
relevant AI technologies, systems, and 
applications in the development of applicable 
guidance and requirements;
(ix) procedures for assigning appropriate 
personnel to serve as liaisons and points of 
contact for regulated entities with approved AI 
test projects; and
(x) procedures for coordinating decisions 
relating to applications submitted jointly by 
multiple regulated entities or applications 
submitted to more than one financial regulatory 
agency.
(b) Interagency Coordination and Consultation.--The financial 
regulatory agencies shall consult, share information, and coordinate, 
and may enter into a joint memorandum of understanding, in order to--
(1) facilitate any joint approvals of applications;
(2) understand and establish best practices with respect 
to--
(A) AI innovation Labs;
(B) promulgating and updating guidance and rules 
related to financial products, services, and activities 
that make substantial use of artificial intelligence 
based on the lessons learned from AI test projects; and
(C) AI test project applications, approvals, 
alternative compliance methods, conditions, terms, 
reporting, disclosures, oversight, and guidance; and
(3) avoid unnecessary, duplicative, or conflicting 
processes or efforts with respect to AI test project 
applications, approvals, reporting, and disclosures.

SEC. 5. ANNUAL REPORT.

(a) In General.--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 shall include aggregated 
findings, trends, and lessons learned from the AI test projects.
(b) Confidentiality.-- A report under this section--
(1) may not include the names of participating entities or 
any proprietary or confidential business information; and
(2) where appropriate, may contain a classified annex.
Union Calendar No. 619

119th CONGRESS

2d Session

H. R. 4801

[Report No. 119-713]

_______________________________________________________________________

A BILL

To establish AI Innovation Labs that permit certain persons to 
experiment with artificial intelligence without expectation of 
enforcement actions.

_______________________________________________________________________

June 24, 2026

Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed