,,ib ,union ,calendar ,no4 #fab #aaith ,,congress #b;d ,session ,h4 ,r4 #hfga ,report ,no4 #aai-gjd ,,in ,,the ,,house ,,of ,,representatives ,may #g1 #bjbf,mr4 ,flood introduced the following bill2 which was referred to the ,committee on ,financial ,services ,june #ah1 #bjbf;,additional sponsor3 ,ms4 ,pettersen ,june #ah1 #bjbf,reported with an amendment1 committed to the ,committee of the ,whole ,house on the ,state of the ,union1 and ordered to be printed,strike out all after the enacting clause and insert the part printed in italic,for text of introduced bill1 see copy of bill as introduced on ,may #g1 #bjbf ,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 means emerging technologies used to detect1 prevent1 or mitigate financial fraud and scams1 including artificial intelligence1 machine learning1 predictive analytics1 behavioral biometrics1 network analytics1 data fusion tools1 distributed ledger-based monitoring tools1 and blockchain tracing tools4 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 has the meaning given the term insured credit union 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 and scam 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 the ,federal ,communications ,commission1 and other appropriate ,federal and ,state government agencies1 including 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 technologies1 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 detection1 prevention1 loss reduction1 loss mitigation1 privacy1 and consumer protection2 7,c7 barriers to adoption and considerations of interoperability1 data access1 liability1 error rates1 and regulation2 and 7,d7 how various fraud detection technologies differ in use1 effectiveness1 costs1 benefits1 and considerations under subparagraphs 7,a7 through 7,c74 7#b7 ,community financial institution access ,community financial institution 7that is either an insured depository institution or credit union7 access to advanced fraud detection technology1 including-- 7,a7 challenges faced by community financial institutions in accessing or deploying advanced fraud detection tools1 including unique challenges faced by various types of community financial institutions2 7,b7 whether economies of scale disadvantage smaller community financial institutions in general1 or certain types of smaller 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 by insured depository institutions and credit unions 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 steps ,federal banking agencies can take in coordination with other relevant government agencies and the private sector to ensure access by insured depository institutions and credit unions1 including community financial institutions and their third-party vendors1 to such models1 applications1 and tools4 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 what benefits and risks arise from existing supervisory expectations with respect to innovations in fraud detection and prevention1 including whether existing supervisory expectations create barriers to innovation while maintaining relevant safeguards2 7,b7 the need for interagency guidance1 regulatory clarity1 or safe harbors to support technology adoption in a manner that promotes fraud detection and prevention consistent with consumer protection1 privacy1 safety and soundness1 and national security2 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 available4 7#b7 ,classified annex ,a report under paragraph 7#a7 may include a classified annex1 if applicable1 provided to the committees4 7#c7 ,recommendations ,the report required under paragraph 7#a7 shall include legislative1 regulatory1 or supervisory recommendations that promote fraud detection and prevention consistent with consumer protection1 safety and soundness1 and national security1 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 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 ,financial ,institution ,fraud ,technology ,pilot ,program 7a7 ,in general ,not later than #a year after submission of the report required under section #c7;c71 the ,federal banking agencies may jointly establish a voluntary pilot program to facilitate community financial institution access for insured depository institutions and credit unions with less than #aj1jjj1jjj1jjj in total consolidated assets 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 7c7 ,sunset and report 7#a7 ,sunset ,any pilot program established under this section shall expire not later than #c years after submission of the report required under section #c7;c74 7#b7 ,report ,not later than #f months after the expiration of all pilot programs established under this section1 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 ,senate1 and make such report available to the public1 containing-- 7,a7 all findings and determinations made by the ,federal banking agencies in carrying out any pilot program established under this section2 and 7,b7 any legislative1 regulatory1 or other recommendations the ,federal banking agencies may have based on such findings and determinations4 7#c7 ,classified annex ,a report under paragraph 7#b7 may include a classified annex1 if applicable1 provided to the committees4 ,june #ah1 #bjbf,reported with an amendment1 committed to the ,committee of the ,whole ,house on the ,state of the ,union1 and ordered to be printed