AI Disclosure Bill: Transparency in Financial Services
A new bill introduced in Congress is aiming to shed some light on the use of AI in financial services. Rep. Maxine Waters, a Democrat from California, presented the Responsible AI Disclosure Act of 2024. This legislation calls on various Federal regulators to delve into the world of AI products in finance. The goal is to understand where the data comes from, how it’s utilized, the design and function of AI models, and how well they comply with Federal laws and regulations. It’s all about bringing transparency to these high-tech tools.
If the bill passes, Federal regulators will have six months to analyze and report their findings to key Congressional committees. This report will also offer suggestions on whether additional Federal actions should be taken to oversee AI models. The idea is to give consumers a clear view of how AI is being used to make decisions, ensure the quality of data, and understand how their data is being utilized throughout the process.
The bill goes even further by urging regulators to look into whether financial entities and their partners need to provide more information about how they train AI models. They’ll delve into the types and amounts of synthetic versus actual data used in training these AI systems. The agencies involved in this review include the Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, National Credit Union Administration, and the Securities and Exchange Commission.
This legislation follows Rep. Waters’ ongoing work on AI matters. Alongside House Financial Services Committee Chair Patrick McHenry, a Republican from North Carolina, Rep. Waters initiated a bipartisan Working Group on Artificial Intelligence. This latest bill is part of her efforts to ensure that AI in finance is carefully regulated and doesn’t exacerbate existing inequalities or harm consumers.
The Responsible AI Disclosure Act joins the growing conversation in Congress about AI’s impact on our financial system. The goal is to make sure that the benefits of AI are harnessed responsibly and ethically, without losing sight of the potential risks.
