I 
118TH CONGRESS 
2D SESSION 
H. R. 9309 
To provide for regulatory sandboxes that permit certain persons to experiment 
with artificial intelligence without expectation of enforcement actions. 
IN THE HOUSE OF REPRESENTATIVES 
AUGUST 6, 2024 
Mr. HILL (for himself and Mr. TORRES of New York) introduced the following 
bill; which was referred to the Committee on Financial Services 
A BILL 
To provide for regulatory sandboxes that permit certain per-
sons to experiment with artificial intelligence without 
expectation of enforcement actions. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Unleashing AI Innova-
tion in Financial Services Act’’. 
SEC. 2. USE OF ARTIFICIAL INTELLIGENCE BY REGULATED 
FINANCIAL ENTITIES. 
(a) DEFINITIONS.—In this section: 
(1) AI TEST
PROJECT.—The term ‘‘AI test 
project’’ means a financial product or service that 
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falls under the jurisdiction of a financial regulatory 
agency and— 
(A) substantially uses artificial intelligence; 
and 
(B) is or may be subject to a Federal regu-
lation or Federal statute. 
(2) APPROPRIATE
FINANCIAL
REGULATORY 
AGENCY.—The term ‘‘appropriate financial regu-
latory agency’’ means— 
(A) the appropriate Federal banking agen-
cy, as defined in section 3 of the Federal De-
posit Insurance Act (12 U.S.C. 1813); 
(B) the Securities and Exchange Commis-
sion, with respect to— 
(i) any broker or dealer that is reg-
istered with the Commission under the Se-
curities Exchange Act of 1934 (15 U.S.C. 
78a et seq.), with respect to the activities 
of the broker or dealer that require the 
broker or dealer to be registered under 
that Act; 
(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.), with respect to the 
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activities of the investment company that 
require the investment company to be reg-
istered under that Act; 
(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.), with respect to the 
investment advisory activities of such com-
pany and activities that are incidental to 
such advisory activities; 
(iv) any clearing agency registered 
with the Commission under the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et 
seq.), with respect to the activities of the 
clearing agency that require the agency to 
be registered under such Act; 
(v) any nationally recognized statis-
tical rating organization registered with 
the Commission under the Securities Ex-
change Act of 1934 (15 U.S.C. 78a et 
seq.); 
(vi) any transfer agent registered with 
the Commission under the Securities Ex-
change Act of 1934 (15 U.S.C. 78a et 
seq.); 
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(vii) any exchange registered as a na-
tional securities exchange with the Com-
mission under the Securities Exchange Act 
of 1934 (15 U.S.C. 78a et seq.); 
(viii) any national securities associa-
tion registered with the Commission under 
the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.); 
(ix) any securities information proc-
essor registered with the Commission 
under the Securities Exchange Act of 1934 
(15 U.S.C. 78a et seq.); 
(x) the Municipal Securities Rule-
making Board established under the Secu-
rities 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 Securi-
ties Investor Protection Act of 1970 (15 
U.S.C. 78aaa et seq.); and 
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(xiii) any security-based swap execu-
tion facility, security-based swap data re-
pository, security-based swap dealer or 
major security-based swap participant reg-
istered with the Commission under the Se-
curities Exchange Act of 1934 (15 U.S.C. 
78a et seq.), with respect to the security- 
based swap activities of the person that re-
quire 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 Finan-
cial Protection Act of 2010 (12 U.S.C. 5481), 
that is not described in subparagraph (A), (B), 
(D), or (E); 
(D) the National Credit Union Administra-
tion, with respect to an insured credit union; 
and 
(E) the Federal Housing Finance Agency, 
with respect to Federal Home Loan Banks or 
the Federal Home Loan Bank System, and 
with respect to the Federal National Mortgage 
Association or the Federal Home Loan Mort-
gage Corporation. 
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(A) has the meaning given the term in sec-
tion 1002 of the Consumer Financial Protection 
Act of 2010 (12 U.S.C. 5481); 
(B) includes— 
(i) activities that are financial in na-
ture, 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 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 insur-
ance. 
(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 Cor-
poration; 
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(C) the Office of the Comptroller of the 
Currency; 
(D) the Securities and Exchange Commis-
sion; 
(E) the Bureau of Consumer Financial 
Protection; 
(F) the National Credit Union Administra-
tion; and 
(G) the Federal Housing Finance Agency. 
(8) REGULATED ENTITY.—The term ‘‘regulated 
entity’’ means an entity regulated by any financial 
regulatory agency. 
(b) REGULATORY SANDBOXES.— 
(1) ESTABLISHMENT.—Each financial regu-
latory agency shall establish a regulatory sandbox 
that allows regulated entities to experiment with AI 
test projects without unnecessary or unduly burden-
some regulation or expectation of retroactive en-
forcement actions. 
(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 finan-
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cial regulatory agency, to engage in an AI 
test project. 
(ii) CONTENTS.—An application sub-
mitted 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 finan-
cial regulatory agency or a Fed-
eral statute enforced by the ap-
propriate 
financial 
regulatory 
agency that the regulated entity 
requests to be waived or modi-
fied; and 
(bb) proposes an alternative 
method for the regulated entity 
to comply with the regulation or 
statute, including an explanation 
as to why the alternative method 
is essential to the operation of 
the entity; 
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(III) a demonstration that, under 
the strategy described in subclause 
(I), the AI test project— 
(aa) would serve the public 
interest, improve consumer ac-
cess to a financial product or 
service, or promote consumer 
protection; 
(bb) would enhance effi-
ciency or operations, foster inno-
vation or competitiveness, im-
prove risk management and secu-
rity, or enhance regulatory com-
pliance; 
(cc) would not present a sys-
temic risk to the financial system 
of the United States; 
(dd) is consistent with the 
purposes of the anti-money laun-
dering and countering the financ-
ing of terrorism obligations under 
subchapter II of chapter 53 of 
title 31, United States Code; and 
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(ee) would not present a na-
tional security risk to the United 
States; 
(IV) a proposed date on which 
the AI test project would terminate 
and an explanation of why such termi-
nation date would be appropriate; 
(V) proposed limitations on the 
size, scope, and growth of the AI test 
project; and 
(VI) an estimate of the economic 
impact of the AI test project if ap-
proved. 
(iii) JOINT
APPLICATIONS.—Two or 
more regulated entities may submit a joint 
application to the same financial regu-
latory agency under clause (i). 
(iv) REGULATIONS AND STATUTES 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 by or a Federal 
statute enforced by a financial regu-
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latory agency that is not the appro-
priate financial regulatory agency for 
the regulated entity. 
(II) REQUIREMENTS.—An appli-
cation 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 regu-
latory agency and the financial 
regulatory agency that issued the 
regulation or enforces the statute 
or regulation that is the subject 
of the alternative compliance 
strategy; and 
(bb) the AI test project may 
not take effect unless the appro-
priate financial regulatory agency 
and any other financial regu-
latory agency that issued the reg-
ulation or enforces the statute 
that is the subject of the alter-
native compliance strategy jointly 
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(ii) APPROVAL.— 
(I) IN GENERAL.—If the appli-
cant shows that it is more likely than 
not that the application meets the re-
quirements for establishing an alter-
native compliance strategy and meets 
the requirements described in sub-
paragraph (A)(ii)(II), the agency shall 
approve the application and notify the 
applicant in writing of— 
(aa) the regulation or Fed-
eral statute that is the subject of 
the alternative compliance strat-
egy; 
(bb) the terms of the alter-
native 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 limita-
tions or conditions on the AI test 
project, as determined by the ap-
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propriate 
financial 
regulatory 
agency. 
(II) EFFECT OF APPROVAL.—Ex-
cept as provided in subclause (III), 
beginning on the date on which an ap-
plication submitted under subpara-
graph (A) is approved and ending on 
the 
date 
described 
in 
subclause 
(I)(cc)— 
(aa) the appropriate finan-
cial regulatory agency may en-
force a regulation or Federal 
statute 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 appro-
priate financial regulatory agency 
may not enforce a regulation or 
Federal statute described in sub-
clause (I)(aa) with respect to the 
conduct of the AI test project by 
the regulated entity. 
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(III) 
ENFORCEMENT
BY
AN-
OTHER
FINANCIAL
REGULATORY 
AGENCY.—A 
financial 
regulatory 
agency other than the appropriate fi-
nancial regulatory agency that ap-
proves an application under subpara-
graph (A)(iv) may enforce a regula-
tion or Federal statute described in 
subclause (I)(aa) if the alternative 
compliance strategy described in sub-
clause (I)(bb) provides for enforce-
ment by such financial regulatory 
agency. 
(IV) RULE OF CONSTRUCTION.— 
Nothing in this clause may be con-
strued to limit the authority of a fi-
nancial regulatory agency to take an 
enforcement action against a regu-
latory entity with respect to fraud re-
lating to an AI test project. 
(iii) DENIAL.— 
(I) IN GENERAL.—If an agency 
denies an application submitted under 
subparagraph (A), the agency— 
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(aa) shall submit to the ap-
plicant a written notice explain-
ing the reason for denial, includ-
ing evidence that the applicant 
did not satisfy the requirements 
for establishing an alternative 
compliance 
strategy 
and 
the 
baseline used by the agency to 
measure the likely economic con-
sequences of rejecting the appli-
cation; and 
(bb) may not take an en-
forcement action against the ap-
plicant 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 sub-
paragraph (A) is denied, the regulated 
entity may submit another application 
if the application is not substantially 
similar to the one denied. 
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(III) INJUNCTIVE RELIEF.—If a 
financial regulatory agency determines 
an AI test project presents an imme-
diate danger to consumers or presents 
a risk to financial markets, the agency 
may file a civil action in an appro-
priate court seeking to enjoin such 
project. 
(IV) RULE OF CONSTRUCTION.— 
Nothing in this clause may be con-
strued to limit the authority of a fi-
nancial regulatory agency to take an 
enforcement action against an appli-
cant with respect to fraud relating to 
the AI test project. 
(iv) EXTENSION.—If the financial reg-
ulatory agency needs additional time, the 
agency may vote to extend the application 
deadline by 90 days. After the expiration 
of the 90-day period, if the agency has not 
made a determination on the application, 
the 
application 
will 
automatically 
be 
deemed approved and effective. 
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(C) DATA SECURITY.—All data supplied by 
sponsors of AI test projects submitted under 
this section shall be stored in a secure manner. 
(D) REGULATIONS.—Not later than 180 
days after the date of enactment of this Act, 
each financial regulatory agency shall promul-
gate regulations that— 
(i) shall be published in the Federal 
Register and provide a 45-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 set terms; 
(III) termination dates not ear-
lier than 1 year after the date on 
which AI test projects are approved; 
(IV) procedures to extend the 
termination date described in sub-
clause (III); 
(V) 
procedures 
for 
confiden-
tiality; and 
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(VI) procedures for coordinating 
decisions relating to applications sub-
mitted jointly by multiple regulated 
entities or applications submitted to 
more than one financial regulatory 
agency. 
(c) REPORT.—Each financial regulatory agency shall 
submit to the Committee on Banking, Housing, and 
Urban Affairs of the Senate and the Committee on Finan-
cial Services of the House of Representatives an annual 
report on the outcomes of AI test projects. 
(d) REGULATIONS.—After approving not fewer than 
1 AI test project, a financial regulatory agency may pro-
mulgate regulations, after providing a notice and an op-
portunity for public comment, establishing other AI activi-
ties or products that qualify as AI test projects. 
Æ 
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