Lafayette Reporter

Senators John Kennedy (R-La.) and Mark Warner (D-Va.) have introduced the Financial Artificial Intelligence Risk Reduction Act, a bill aimed at safeguarding American investments from manipulation by artificial intelligence (AI) in financial markets. The bill proposes that the Financial Stability Oversight Council (FSOC) take the lead in coordinating the response to AI manipulation among its member agencies.

Kennedy emphasized the need for swift action, stating, "AI is moving quickly, and our laws should do the same to prevent AI manipulation from rattling our financial markets. Our bill would help ensure that AI threats do not put Americans’ investments and retirement dreams at risk."

Warner echoed this sentiment, recognizing both the potential and disruptive power of AI in various industries, particularly in financial markets. He stressed the urgency of addressing vulnerabilities posed by AI, saying, "The time to address those vulnerabilities is now."

The Financial Artificial Intelligence Risk Reduction Act encompasses several key provisions. Firstly, it mandates that FSOC coordinate the response of financial regulators to AI threats, including the use of "deepfakes." This collaborative approach aims to ensure a comprehensive and unified response to AI manipulation.

Additionally, the bill requires FSOC to produce a detailed report that identifies gaps in existing regulations related to AI and provides specific recommendations to address those gaps. This report will be reviewed and commented on by Congress before FSOC initiates proceedings to implement the recommended changes.

The proposed legislation also aims to strengthen penalties for those who use AI to violate Securities and Exchange Commission (SEC) rules. By modernizing the "intent standard," the bill seeks to hold AI deployers accountable when their AI systems violate SEC regulations.

The Financial Artificial Intelligence Risk Reduction Act recognizes the rapid advancement of AI and the need for proactive measures to protect investors and maintain the stability of financial markets. It represents a bipartisan effort to address the potential risks associated with AI manipulation and ensure the integrity of the financial system.

For those interested in delving deeper into the specifics of the bill, the full text of the Financial Artificial Intelligence Risk Reduction Act is available for review.

It is evident that Kennedy and Warner are committed to safeguarding American investments from the disruptive power of AI in financial markets. By proposing this legislation, they aim to mitigate the risks posed by AI manipulation and strengthen the regulatory framework governing AI use in the financial sector.

To learn more, click on this link: https://www.kennedy.senate.gov/public/press-releases?ID=0FC7D429-0223-4483-821E-B595FC41E8A7