WHAT THIS BILL REGULATES · 2 REQUIREMENT TYPES
How Is This Bill Enforced
Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.
(a) "(a) DEFINITION.—In this section, the term 'artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1)' has the meaning given the term in section 5002 of the National Artificial Intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) Initiative Act of 2020 (15 U.S.C. 9401).
(b) COORDINATION, REPORT, AND RECOMMENDATIONS.—The Council shall coordinate with member agencies with regard to potential risks to the stability of the financial system posed by artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1), including— "(1) direct the Office of Financial Research, as appropriate, to conduct research into the uses of artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) by financial institutions and entities providing services to or performing functions on behalf of financial institutions; "(2) identify threats to the stability of the financial system posed by the use of artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) tools and technologies, such as— "(A) the generation and use of false representations of events or the likeness, speech, or actions of persons by malign actors to manipulate financial markets, institutions, or instruments, or to cause disruption in financial markets; "(B) agent deployment and development, including specific gaps in existing laws (including regulations) regarding liability for financial institutions and consumers for unauthorized transactions that could be initiated or completed by agents, including the fragility, if any, created by the concentration of economic activity, capital formation, and decision-making concerning artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) infrastructure providers; and "(C) any other acts or practices associated with the use or assistance of artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) tools or technologies that threaten the stability of the financial system; "(3) not later than 180 days after the date of enactment of this section, in consultation with the member agencies, financial institutions, securities market participants, and entities providing services to or performing functions on behalf of financial institutions or securities markets participants, submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that— "(A) identifies the threats described in paragraph (2); "(B) the training, development, deployment, and proliferation of artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) tools and technologies that are particularly suited for cybersecurity tasks, including specific aptitudes for identifying vulnerabilities and developing tools and techniques to exploit such vulnerabilities; "(C) identifies specific gaps in the existing regulations, guidance, and examination standards of the member agencies that prevent effective and comprehensive responses by each of the member agencies to the threats described in paragraph (2); and "(D) makes specific recommendations for addressing the gaps identified in subparagraph (B), including, as appropriate, recommendations regarding implementation of the recommendations in the Cybersecurity Information Sheet published by the National Security Agency, Federal Bureau of Investigation, and Cybersecurity and Infrastructure Security Agency on September 12, 2023; and "(4) identify, as appropriate, opportunities for the use of artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) technologies in financial regulation and supervision, specifying that any use of artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) by the agencies in regulation and supervision should be transparent and disclosed to their regulated entities as appropriate.
(c) "(c) CONGRESSIONAL REVIEW.—Not later than 30 days after the date on which the relevant congressional committees receive the report required under subsection (a), the committees shall review the report and submit comments and recommendations thereon.
(d) "(d) IMPLEMENTATION OF COUNCIL RECOMMENDATIONS.— "(1) IN GENERAL.—Upon review of comments and recommendations under subsection (c), the Council shall commence action under the procedures prescribed in section 120 with regard to implementation of the recommendations by each of the member agencies.
(e) "(e) CONGRESSIONAL REVIEW ACT.—The provisions of chapter 8 of title 5, United States Code, shall apply as appropriate to rules issued by the member agencies under this section.
(f) "(f) SCENARIO-BASED EXERCISES.—The Federal and Banking Information Infrastructure Committee sponsored by the President's Working Group on Financial Markets shall, in consultation with private-sector entities and other relevant governmental entities— "(1) initiate a series of scenario-based exercises to test the effectiveness of defenses against financial market disruptions associated with the use or assistance of artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) technologies; and "(2) make recommendations for ongoing improvements in detection, prevention, and mitigation of such disruptions.".
Section 2 adds a new section 126 to the Financial Stability Act of 2010, directing the Financial Stability Oversight Council to coordinate with member agencies on systemic risks posed by artificial intelligence. The Council must direct the Office of Financial Research to study AI use by financial institutions, identify threats — expressly including AI-generated false representations used to manipulate markets and liability gaps around AI agent-initiated transactions — and submit a report to the Senate Banking and House Financial Services Committees within 180 days of enactment.
These are governmental directives to a federal council rather than compliance duties on regulated private entities. The section also provides for congressional review of the report, implementation of Council recommendations through the section 120 process, and scenario-based stress exercises run by the Federal and Banking Information Infrastructure Committee. None of these provisions imposes a shippable obligation on a developer or deployer of AI.
(1)-(3) Section 206A of the Federal Credit Union Act (12 U.S.C. 1786a) is amended— (1) in subsection (a)(1), by striking "that" and inserting "an"; (2) in subsection (c)(2), in the matter preceding subparagraph (A), by inserting ", in a manner and method prescribed by the Board," after "Board"; and (3) by striking subsection (f).
Section 3 amends the third-party servicer provisions of the Federal Credit Union Act to expand and adjust the NCUA Board's oversight of entities that provide services — including artificial intelligence services — to credit unions. The changes are technical (a word substitution, a manner-and-method insertion, and the striking of subsection (f)) that adjust the scope of NCUA supervision over service providers rather than imposing a distinct new AI compliance duty on any private actor.
Because these amendments modify existing supervisory authority and do not, on their own text, create a shippable obligation for an AI developer or deployer, no obligation is mapped. The effect is to bring AI service providers to credit unions within the NCUA's examination reach.
(1) "Whenever a regulated entity or the Office of Finance causes to be performed for itself, by contract or otherwise, any activity that is permissible for the regulated entity or the Office of Finance, whether on or off its premises— "(1) such performance shall be subject to regulation and examination by the Director to the same extent as if such activity were being performed by such entity or Office itself on its own premises; and
(2) 1 "(2) the regulated entity or Office of Finance shall notify the Director of the existence of the service relationship not later than 30 days after the earlier of— "(A) making of such service contract; or "(B) the performance of the activity by the service provider.".
Section 4 adds a new section 1329 to the 1992 GSE safety-and-soundness statute, extending the Federal Housing Finance Agency Director's regulation and examination authority to activities that regulated entities or the Office of Finance cause to be performed by contract or otherwise — capturing outsourced AI and other service providers. The performance of such outsourced activity becomes subject to the same regulation and examination as if performed in-house.
The one affirmative duty is a notification requirement: the regulated entity or Office of Finance must notify the Director of a service relationship within 30 days after the earlier of making the service contract or the service provider's performance of the activity. This runs to the regulated financial entity, not to the AI provider, and functions as a regulatory disclosure to a supervisory authority.
(i)(1) "(i) RULEMAKING REGARDING ARTIFICIAL INTELLIGENCEartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1).— "(1) DEFINITIONS.—In this subsection: "(A) ARTIFICIAL INTELLIGENCEartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1).—The term 'artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1)' has the meaning given the term in section 5002 of the National Artificial Intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) Initiative Act of 2020 (15 U.S.C. 9401). "(B) COVERED PERSONcovered personThe term 'covered person'— (i) means a person that is required by a provision of this title, or by a rule or regulation under this title, to maintain policies, procedures, or controls; and (ii) includes— (I) an issuer that has a class of securities registered pursuant to section 12; (II) an issuer that is required to file reports under section 15(d); (III) a broker; (IV) a dealer; (V) a security-based swap dealer; and (VI) a self-regulatory organization.Securities Exchange Act of 1934 § 3(i)(1)(B).—The term 'covered personcovered personThe term 'covered person'— (i) means a person that is required by a provision of this title, or by a rule or regulation under this title, to maintain policies, procedures, or controls; and (ii) includes— (I) an issuer that has a class of securities registered pursuant to section 12; (II) an issuer that is required to file reports under section 15(d); (III) a broker; (IV) a dealer; (V) a security-based swap dealer; and (VI) a self-regulatory organization.Securities Exchange Act of 1934 § 3(i)(1)(B)'— "(i) means a person that is required by a provision of this title, or by a rule or regulation under this title, to maintain policies, procedures, or controls; and "(ii) includes— "(I) an issuer that has a class of securities registered pursuant to section 12; "(II) an issuer that is required to file reports under section 15(d); "(III) a broker; "(IV) a dealer; "(V) a security-based swap dealer; and "(VI) a self-regulatory organization.
(i)(2) 2 "(2) REQUIREMENT.— "(A) IN GENERAL.—Not later than 180 days after the enactment of this section the Commission shall, by rule or regulation, impose specific requirements on each covered personcovered personThe term 'covered person'— (i) means a person that is required by a provision of this title, or by a rule or regulation under this title, to maintain policies, procedures, or controls; and (ii) includes— (I) an issuer that has a class of securities registered pursuant to section 12; (II) an issuer that is required to file reports under section 15(d); (III) a broker; (IV) a dealer; (V) a security-based swap dealer; and (VI) a self-regulatory organization.Securities Exchange Act of 1934 § 3(i)(1)(B) to ensure that the policies, procedures, or controls described in paragraph (1)(B)(i) maintained by the covered personcovered personThe term 'covered person'— (i) means a person that is required by a provision of this title, or by a rule or regulation under this title, to maintain policies, procedures, or controls; and (ii) includes— (I) an issuer that has a class of securities registered pursuant to section 12; (II) an issuer that is required to file reports under section 15(d); (III) a broker; (IV) a dealer; (V) a security-based swap dealer; and (VI) a self-regulatory organization.Securities Exchange Act of 1934 § 3(i)(1)(B)— "(i) address the use of artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) by the covered personcovered personThe term 'covered person'— (i) means a person that is required by a provision of this title, or by a rule or regulation under this title, to maintain policies, procedures, or controls; and (ii) includes— (I) an issuer that has a class of securities registered pursuant to section 12; (II) an issuer that is required to file reports under section 15(d); (III) a broker; (IV) a dealer; (V) a security-based swap dealer; and (VI) a self-regulatory organization.Securities Exchange Act of 1934 § 3(i)(1)(B); and "(ii) are reasonably designed to ensure compliance with the requirements of this title. "(B) PROCEDURES.—In carrying out subparagraph (A), the Commission shall— "(i) identify and require governance measures with respect to testing, deployment, monitoring, human oversight, permissions, escalation procedures, and use limitations applicable to artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) systems; and "(ii) consider the extent to which— "(I) artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) systems are developed, controlled, modified, or operated by a covered personcovered personThe term 'covered person'— (i) means a person that is required by a provision of this title, or by a rule or regulation under this title, to maintain policies, procedures, or controls; and (ii) includes— (I) an issuer that has a class of securities registered pursuant to section 12; (II) an issuer that is required to file reports under section 15(d); (III) a broker; (IV) a dealer; (V) a security-based swap dealer; and (VI) a self-regulatory organization.Securities Exchange Act of 1934 § 3(i)(1)(B) as compared to third-party providers; and "(II) control is exercised by a covered personcovered personThe term 'covered person'— (i) means a person that is required by a provision of this title, or by a rule or regulation under this title, to maintain policies, procedures, or controls; and (ii) includes— (I) an issuer that has a class of securities registered pursuant to section 12; (II) an issuer that is required to file reports under section 15(d); (III) a broker; (IV) a dealer; (V) a security-based swap dealer; and (VI) a self-regulatory organization.Securities Exchange Act of 1934 § 3(i)(1)(B) over the actions of artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) systems.".
Section 5 is the operative private-facing provision. It amends section 3 of the Securities Exchange Act of 1934 to require the Securities and Exchange Commission, within 180 days, to issue rules imposing specific requirements on each covered person — issuers with registered securities or reporting obligations, brokers, dealers, security-based swap dealers, and self-regulatory organizations — to ensure that their required policies, procedures, or controls address the use of artificial intelligence and are reasonably designed to ensure compliance with the securities laws.
The rule must identify and require governance measures covering testing, deployment, monitoring, human oversight, permissions, escalation procedures, and use limitations for AI systems, and must consider the degree to which AI is developed or controlled in-house versus by third-party providers. Because the direct compliance duty on covered persons will be defined by the future SEC rule rather than the statute itself, the near-term obligation is a rulemaking directive to the SEC; the anticipated downstream duty on covered persons is an AI governance program requirement.
(a) DEFINITIONS.— (1) ARTIFICIAL INTELLIGENCEartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1).—The term "artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1)" has the meaning given the term in section 5002 of the National Artificial Intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) Initiative Act of 2020 (15 U.S.C. 9401). (2) SECURITIES LAWSsecurities lawsThe term 'securities laws' has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).FAIRR Act § 6(a)(2).—The term "securities lawssecurities lawsThe term 'securities laws' has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).FAIRR Act § 6(a)(2)" has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
(b) RULES.—Nothing in this Act, or any amendment made by this Act, may be construed to— (1) limit the securities lawssecurities lawsThe term 'securities laws' has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).FAIRR Act § 6(a)(2) such that artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) may be used in a manner that would contravene any of the securities lawssecurities lawsThe term 'securities laws' has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).FAIRR Act § 6(a)(2); or (2) provide that the use of artificial intelligenceartificial intelligencethe term 'artificial intelligence' has the meaning given the term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).Financial Stability Act of 2010 § 126(a); Securities Exchange Act of 1934 § 3(i)(1)(A); FAIRR Act § 6(a)(1) excuses compliance with any obligation under the securities lawssecurities lawsThe term 'securities laws' has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).FAIRR Act § 6(a)(2).
Section 6 sets out definitions applicable across the Act and includes a savings clause. It adopts the section 5002 definition of artificial intelligence and the section 3(a) Exchange Act definition of securities laws, and provides that nothing in the Act may be construed to permit AI use that contravenes the securities laws or to treat AI use as an excuse for noncompliance with securities-law obligations.
These are interpretive and construction provisions rather than affirmative compliance duties. They confirm that existing securities-law obligations continue to apply to AI-assisted activity, but create no independent obligation to map.