,i #aaith ,,congress #b;d ,session ,h4 ,r4 #hfga ,,in ,,the ,,house ,,of ,,representatives ,may #g1 #bjbf,mr4 ,flood introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to require the ,federal banking agencies to conduct a study on the use of advanced technologies in fraud detection and prevention1 with particular attention to community financial institutions1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,bank ,fraud ,technology ,advancement ,act of #bjbf4 #b4 ,definitions ,in this ,act3 7#a7 ,advanced fraud detection technology ,the term advanced fraud detection technology includes artificial intelligence1 machine learning1 predictive analytics1 behavioral biometrics1 network analytics1 data fusion tools1 distributed ledger-based monitoring tools1 blockchain tracing tools1 and other emerging technologies used to detect1 prevent1 or mitigate financial fraud4 7#b7 ,artificial intelligence ,the term artificial intelligence has the meaning given that term in section #ejjb of the ,national ,artificial ,intelligence ,initiative ,act of #bjbj 7#ae ,u4,s4,c4 #idja74 7#c7 ,credit union ,the term credit union means a ,state credit union or ,federal credit union1 as such terms are defined1 respectively1 in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb74 7#d7 ,federal banking agency ,the term ,federal banking agency-- 7,a7 has the meaning given such term in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac72 and 7,b7 means the ,national ,credit ,union ,administration4 7#e7 ,insured depository institution ,the term insured depository institution has the meaning given such term in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac74 7#f7 ,machine learning ,the term machine learning has the meaning given that term in section #ejjb of the ,national ,artificial ,intelligence ,initiative ,act of #bjbj 7#ae ,u4,s4,c4 #idja74 #c4 ,study on advanced technologies in fraud detection and prevention 7a7 ,in general ,the ,federal banking agencies1 in consultation with the ,secretary of the ,treasury1 the ,financial ,crimes ,enforcement ,network1 the ,federal ,trade ,commission1 the ,bureau of ,consumer ,financial ,protection1 and appropriate law enforcement agencies1 shall jointly conduct a comprehensive study on the use of advanced fraud detection technology by insured depository institutions and credit unions4 7b7 ,required elements ,the study required under subsection 7a7 shall evaluate the following3 7#a7 ,current use and effectiveness ,the current use and effectiveness of advanced fraud detection technology1 including-- 7,a7 the extent to which insured depository institutions and credit unions of varying asset sizes deploy advanced fraud detection technology2 7,b7 measurable outcomes relating to fraud reduction1 loss mitigation1 and consumer protection2 and 7,c7 barriers to adoption1 including cost1 interoperability constraints1 regulatory uncertainty1 data access limitations1 and liability concerns4 7#b7 ,community financial institution access ,community financial institution access to advanced fraud detection technology1 including-- 7,a7 challenges faced by community financial institutions in accessing or deploying advanced fraud detection tools2 7,b7 whether economies of scale disadvantage smaller community financial institutions relative to large community financial institutions2 7,c7 options to facilitate shared services1 utility models1 managed-service providers1 or consortium-based fraud detection platforms2 and 7,d7 recommendations to ensure regulatory guidance is appropriately tailored to avoid discouraging adoption by smaller community financial institutions4 7#c7 ,artificial intelligence and machine learning ,artificial intelligence and machine learning1 including-- 7,a7 the use of artificial intelligence and machine learning models1 applications1 and tools in detecting fraud patterns1 anomalies1 synthetic identity fraud1 and real-time payment fraud2 7,b7 governance frameworks used by insured depository institutions and credit unions to manage fraud model risk1 explainability1 and validation2 and 7,c7 interactions between fraud detection models and consumer protection laws4 7#d7 ,information sharing and public-private partnerships ,information sharing and public-private partnerships1 including-- 7,a7 the effectiveness of existing information-sharing frameworks2 7,b7 whether expanded public-private partnerships or centralized fraud utilities would enhance detection capabilities2 7,c7 the feasibility of a voluntary fraud analytics consortium accessible to community financial institutions2 and 7,d7 privacy1 data protection1 and cybersecurity considerations associated with expanded data sharing4 7#e7 ,payments system risks ,payments system risk1 including-- 7,a7 fraud risks associated with electronic funds transfers and checks2 and 7,b7 whether advanced analytics can reduce fraud while preserving settlement finality and payment system stability4 7#f7 ,regulatory and supervisory considerations ,regulatory and supervisory considerations1 including-- 7,a7 whether existing supervisory expectations create barriers to innovation2 7,b7 the need for interagency guidance1 regulatory clarity1 or safe harbors to support technology adoption2 7,c7 opportunities to harmonize expectations across ,federal banking agencies2 and 7,d7 whether additional training for ,federal banking agencies staff is necessary to promote effective regulation and supervision of financial institutions' use of advanced fraud detection technology1 especially for community financial institutions4 7c7 ,report and recommendations 7#a7 ,report ,not later than #ah months after the date of enactment of this ,act1 the ,federal banking agencies shall issue a report to the ,committee on ,financial ,services of the ,house of ,representatives and the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate containing all findings and determinations made in carrying out the study required under this section1 and make such report publicly available1 except for classified or supervisory information4 7#b7 ,recommendations ,the report required under paragraph 7#a7 shall include legislative1 regulatory1 or supervisory recommendations which may include-- 7,a7 proposals to support shared fraud detection utilities or consortium-based analytics platforms2 7,b7 guidance or safe harbors to encourage responsible artificial intelligence use in fraud prevention2 7,c7 pilot programs tailored to community financial institutions2 and 7,d7 recommendations to strengthen public-private information sharing consistent with privacy and civil liberties protections4 #d4 ,community bank fraud technology pilot program 7a7 ,in general ,not later than #a year after submission of the study under section #c1 the ,federal banking agencies may jointly establish a voluntary pilot program to facilitate community financial institution access to advanced fraud detection tools4 7b7 ,program features ,the pilot program described in subsection 7a7 may include-- 7#a7 pooled procurement or shared services models2 7#b7 model validation assistance or technical support2 7#c7 standardized vendor risk management templates2 7#d7 regulatory clarity regarding model governance expectations2 and 7#e7 collaboration with the ,department of the ,treasury and law enforcement to provide anonymized fraud typology data feeds4