Federal: AFC Letter of Support for Legislation Advancing AI Innovation, Fraud Prevention, and Supervisory Modernization in Financial Services

The Honorable French Hill
Chairman
Committee on Financial Services
United States House of Representatives
Washington, DC 20515

The Honorable Maxine Waters
Ranking Member
Committee on Financial Services
United States House of Representatives
Washington, DC 20515

Re: Letter of Support for Legislation Advancing AI Innovation, Fraud Prevention, and Supervisory Modernization in Financial Services

Dear Chairman Hill and Ranking Member Waters:

On behalf of the American Fintech Council (AFC),  I write to express our strong support for the legislation before the Committee at the May 13, 2026 markup. AFC appreciates the Committee’s continued leadership in advancing a forward-looking, technology-driven legislative agenda that promotes competition, responsible innovation, consumer protection, and a resilient U.S. financial services ecosystem. The bills under consideration reflect a cohesive and pragmatic vision for leveraging artificial intelligence and advanced technology to modernize financial supervision, combat financial crime, and empower both regulators and regulated entities to meet the demands of a digital-first economy.

A standards-based organization, the American Fintech Council is the largest and most diverse trade association representing financial technology (fintech) companies and innovative banks. On behalf of over 150 member companies and partners, AFC promotes a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. AFC members foster competition in consumer finance and pioneer products to better serve underserved consumer segments and geographies.

We believe the bills under consideration by the Committee advance these objectives in several important ways. Our support for these provisions is due to their close ties with AFC’s policy priorities. Specifically, we appreciate the Committee’s efforts to pursue federal measures related to AI and improve  supervisory clarity, and craft durable transparency in the federal banking framework.

I. Establishing a Foundation for AI Risk Assessment in Financial Crime

AFC supports H.R. 2152, the Artificial Intelligence Practices, Logistics, Actions, and Necessities (AI PLAN) Act, introduced by Rep. Zach Nunn. This legislation directs the Departments of Treasury, Homeland Security, and Commerce to jointly produce a comprehensive assessment of the national and economic security risks posed by the use of artificial intelligence in financial crimes, along with legislative recommendations and best practices for both public- and private-sector entities.

AFC members actively deploy AI to improve their financial services offerings, and they are acutely aware that bad actors are increasingly weaponizing the same technologies to perpetrate sophisticated fraud, money laundering, and other financial crimes. AFC has previously articulated our views on the opportunities and risks of AI in financial services in our August 2024 response to the Treasury Department’s Request for Information on the same subject, where we emphasized the need for clear, risk-based “rules of the road” and meaningful industry consultation as agencies develop AI oversight frameworks.  We are encouraged that the AI PLAN Act takes a deliberate, whole-of-government approach rather than attempting to legislate in advance of a full understanding of the threat landscape. AFC looks forward to contributing to the public- and private-sector dialogue that this report will catalyze, and we encourage the Committee to include provisions ensuring that fintech companies and industry stakeholders are meaningfully consulted as the relevant agencies develop their findings and recommendations.

II. Fostering Responsible AI Innovation Through Supervised Experimentation

AFC continues to strongly support H.R. 4801, the Unleashing AI Innovation in Financial Services Act, introduced by Chairman Hill. This legislation requires each federal financial regulatory agency to establish or designate an AI Innovation Lab, empowering regulated entities to test AI applications within supervised regulatory sandboxes. AFC has been on the record in support of this exact legislation since August 2025, when we submitted a formal letter of support to Chairman Hill and Senate sponsor Sen. Mike Rounds.

AFC has long advocated for the creation of innovative pathways that allow responsible experimentation without exposing consumers or the financial system to undue risk. AFC is particularly encouraged that the bill requires agencies to actively engage with regulated entities in these labs, as collaborative engagement, rather than passive observation, is essential to ensuring that regulators develop the institutional expertise to supervise AI-driven financial products effectively.

The Unleashing AI Innovation in Financial Services Act also directly advances U.S. competitiveness. Peer jurisdictions in Europe, the United Kingdom, and Asia-Pacific region have established innovation offices and regulatory sandboxes that have attracted significant fintech investment and talent. AFC commends Chairman Hill for his leadership on this issue and urges the Committee to advance this legislation expeditiously.

III. Expanding Community Financial Institutions’ Access to AI-Powered Fraud Detection

AFC supports H.R. 8671, the Bank Fraud Technology Advancement Act of 2026, introduced by Rep. Mike Flood. This legislation requires the federal banking agencies and the National Credit Union Administration to study how AI and machine learning are being used to detect and prevent financial fraud, with a particular focus on the challenges faced by smaller banks and credit unions, and to report to Congress with findings and recommendations within 18 months. The bill also authorizes a voluntary pilot program to expand community financial institutions’ access to fraud-fighting technology.

AFC strongly supports the bill’s focus on community financial institutions. Smaller banks and credit unions are disproportionately challenged by the growing sophistication of financial fraud: they face the same threat landscape as large institutions but often lack the resources to develop or procure cutting-edge detection and prevention capabilities. AFC members that provide technology and compliance solutions to community banks are acutely aware of these gaps, and we believe that the interagency study mandated by this bill will provide a timely and important evidentiary foundation for subsequent policy action. AFC is particularly encouraged by the bill’s voluntary pilot program, which reflects a collaborative, market-driven approach to expanding access to fraud-fighting technology rather than a prescriptive one. We encourage the Committee to ensure that the pilot program is designed in consultation with fintech companies and technology providers, as AFC members are well-positioned to offer scalable, cost-effective solutions to community financial institutions that lack the capacity to build these capabilities in-house. AFC also supports the bill’s emphasis on strengthening information-sharing while protecting privacy, as robust, privacy-preserving data exchange between financial institutions and between the public and private sectors is a critical enabler of effective fraud detection.

IV. Strengthening Protections for Vulnerable Consumers and Empowering Law Enforcement

AFC strongly supports H.R. 2978, the GUARD Act, also introduced by Rep. Nunn. Elder financial fraud and “pig butchering” scams represent a devastating and rapidly growing threat, and AFC believes that Congress has both an opportunity and an obligation to bring all available tools to bear against these crimes. The GUARD Act takes several meaningful steps in this direction. By authorizing state and local law enforcement to use existing federal grant funding for training and enforcement activities related to financial fraud, elder fraud, and pig butchering, the bill acknowledges the reality that these crimes are fought on the front lines by local officers who currently lack adequate resources. Combatting financial fraud requires a whole-of-government approach, which includes state and local law enforcement agents as they are often the first responders to a fraud event. The GUARD Act recognizes this fact and seeks to properly address the resource inequity to ensure that these agencies can effectively serve their communities.

AFC also supports the bill’s requirement that the Treasury Department produce a comprehensive study on the state of fraud and scams and a separate report on enforcement efforts and recommendations. Grounding future policy in a rigorous assessment of current fraud typologies, industry practices, and technology solutions will help ensure that subsequent legislation and regulation is both targeted and effective. In our September 2025 comment letter responding to an interagency RFI on payments fraud,  AFC cited Federal Trade Commission data showing that bank transfer and payment fraud alone accounted for $2.09 billion in consumer losses in 2024, a figure that powerfully illustrates the urgency of the law enforcement resourcing and coordination mechanisms H.R. 2978 would provide. AFC commends Rep. Nunn for his leadership on this issue and urges the Committee to advance this legislation expeditiously.

V. Modernizing Supervisory Infrastructure for the Digital Age

AFC supports H.R. 8278, the FUTURES Act, introduced by Rep. Marlin Stutzman. This legislation requires financial regulatory agencies to assess whether the technologies they currently use pose challenges to conducting real-time supervisory assessments of the firms within their jurisdiction, and to identify opportunities for testing and adopting new technological systems.

Effective supervision requires that regulators and regulated entities operate with compatible, modern technology infrastructure. AFC members have invested heavily in compliance and risk management technology, yet they frequently encounter regulatory examination processes that rely on outdated data-sharing formats and legacy systems, creating unnecessary friction and reducing the quality of supervisory information available to regulators. AFC encourages the Committee to ensure that the FUTURES Act’s review process is conducted transparently and with meaningful industry input, as regulated entities are well-positioned to identify specific technological incompatibilities and to propose practical solutions. We also urge the Committee to consider whether the bill’s mandate should explicitly encompass the Consumer Financial Protection Bureau, given the CFPB’s central role in supervising many AFC members.

* * *

AFC appreciates Chairman Hill’s and the Committee’s dedication to advancing a comprehensive, technology-forward legislative agenda that addresses both the opportunities and the risks created by AI and advanced technology in financial services, as well as improves the examination process for innovative banks, and encourages responsible innovation throughout the U.S. financial services industry. The five bills described above each contribute in distinct and complementary ways to a more innovative, safe, and sound financial system. We urge the Committee to advance all five measures and stand ready to serve as a resource for the Committee and its members as this legislative agenda continues to develop.

Sincerely,

Ian P. Moloney
Chief Policy Officer
American Fintech Council

[1] AFC’s membership spans technology platforms, non-bank lenders, banks, payments providers, loan servicers, credit bureaus, and personal financial management companies.
[2] American Fintech Council, “Comment Letter to Treasury on RFI on Requestfor Information on Uses, Opportunities, and Risks of Artificial Intelligence inthe Financial Services Sector” (Aug. 13, 2024), available at https://fintechcouncil.org/advocacy/federal-ai-letter.
[3] American Fintech Council, “AFC Letter in Support for the Unleashing AIInnovation in Financial Services Act” (Aug. 13, 2025), available at https://fintechcouncil.org/advocacy/federal-afc-letter-in-support-for-the-unleashing-ai-innovation-in-financial-services-act.
[4] American Fintech Council, “Comment Letter on Interagency RFI to Address Payments Fraud” (Aug. 18, 2025), available at https://fintechcouncil.org/advocacy/federal-afc-comment-letter-on-interagency-rfi-to-address-payments-fraud.

‍

‍