Global: CFPB and American Fintech Council Outline AI Regulatory Positions to Treasury

In response to a Treasury request for information on the use, opportunities, and risks of artificial intelligence (AI) in the financial services sector, the Consumer Financial Protection Bureau (CFPB) emphasized the regulatory responsibility to ensure that existing laws are upheld, even with emerging technologies like AI.

The CFPB stated, “Regulators have a legal mandate to enforce federal consumer financial protection laws across all technologies, including AI.” The agency highlighted that financial institutions must not operate under the assumption that new technologies are exempt from compliance. The CFPB cautioned against the “Uber” model, where services are offered without full legal compliance, leaving the legal system to catch up later.

On the other hand, the American Fintech Council (AFC) advocated for a “unified and cohesive” regulatory framework at the federal level to prevent a fragmented state-by-state approach. The AFC argued that such a framework would preempt varying state regulations and create an environment where AI can be utilized more effectively across the financial sector.

In a letter to the Treasury, Ian Moloney, Senior Vice President and Head of Policy and Regulatory Affairs at the AFC, wrote, “A unified federal approach would streamline regulatory requirements, providing clarity and consistency that would enable financial institutions to leverage AI technologies more effectively.”

The contrasting positions underscore the ongoing debate about how to best regulate AI in financial services, balancing innovation with consumer protection.