Treasury issues request for information on use of AI in financial services

The U.S. Department of the Treasury (“Treasury”) has released a Request for Information on the Uses, Opportunities, and Risks of Artificial Intelligence (“AI”) in the Financial Services Sector (“RFI”).  Written comments are due by August 12, 2024. 

AI is a broad topic and the term is sometimes used indiscriminately; as the RFI suggests, most AI systems being used or contemplated in the financial services sector involve machine learning, which is a subset of AI.  The RFI implicitly concedes that Treasury is playing “catch up” and quickly needs to learn more about AI and how industry is using it.  The RFI discusses a vast array of complex issues, including anti-money laundering (“AML”) and anti-fraud compliance, as well as fair lending and consumer protection concerns – particularly those pertaining to bias.

The Press Release and Related Remarks:  What the RFI Seeks to Accomplish

In the press release for the RFI, Under Secretary for Domestic Finance Nellie Liang stated that Treasury is seeking to understand

. . . . how AI is being used within the financial services sector and the opportunities and risks presented by developments and applications of AI within the sector, including potential obstacles for facilitating responsible use of AI within financial institutions, the extent of impact on consumers, investors, financial institutions, businesses, regulators, end-users, and any other entity impacted by financial institutions’ use of AI, and recommendations for enhancements to legislative, regulatory, and supervisory frameworks applicable to AI in financial services.  Treasury is seeking a broad range of perspectives on this topic and is particularly interested in understanding how AI innovations can help promote a financial system that delivers inclusive and equitable access to financial services.

Relatedly, during recent remarks at the Financial Stability Oversight Council Conference on Artificial Intelligence and Financial Stability, Secretary of the Treasury Janet Yellen announced that the use of AI by financial companies was nearing the top of the agenda for Treasury due to both the tremendous opportunities and significant risks posed by AI.  Opportunities presented by AI include enhancement of efforts to combat fraud and illicit finance through AI’s ability to detect anomalies, and its capacity to improve efficiency, accuracy, and access to financial products.  Risks presented by AI include vulnerabilities arising “from the complexity and opacity of AI models; inadequate risk management frameworks to account for AI risks; and interconnections that emerge as many market participants rely on the same data and models.”  Further, according to Secretary Yellen, “[c]oncentration among vendors developing models, providing data, and providing cloud services may also introduce risks, which could amplify existing third-party service provider risks.”  Finally, building AI systems by using…