S. 2117: Preventing Deep Fake Scams Act

The Preventing Deep Fake Scams Act aims to address concerns related to the use of artificial intelligence (AI) in the financial services sector. The bill establishes a Task Force on Artificial Intelligence in the Financial Services Sector, which will focus on the potential benefits and risks associated with AI technologies, especially regarding consumer protection and fraud prevention.

Key Provisions of the Bill

• Task Force Formation: A Task Force will be created, chaired by the Secretary of the Treasury, to monitor and report on AI issues in the financial sector.
• Membership: The Task Force will include members from various key financial regulatory bodies, such as:
  • Comptroller of the Currency
  • Chairman of the Federal Reserve
  • Chairperson of the Federal Deposit Insurance Corporation
  • Director of the Bureau of Consumer Financial Protection
  • Chairman of the National Credit Union Administration
  • Director of the Financial Crimes Enforcement Network
• Report to Congress: The Task Force is required to submit a report to Congress within one year after the bill's enactment. This report will include:
  • How banks and credit unions can use AI to protect against fraud.
  • Standard definitions for various AI terms like “generative AI,” “machine learning,” and “deep fakes.”
  • An overview of potential risks associated with AI misuse by fraudsters.
  • Best practices for financial institutions to safeguard consumer data.
  • Legislative and regulatory recommendations for AI regulation to enhance consumer protection.
• Public Consultation: The Task Force must seek public feedback within 90 days after the bill is enacted and consult with various stakeholders in the financial sector and AI experts to inform their report.
• Termination of Task Force: The Task Force will disband 90 days after issuing its final report.

Context and Background

This legislation responds to the growing use of AI in the financial services sector, recognizing both the innovative benefits and the need for enhanced security measures. The rise of deep fakes, which can mimic voices and appearances, poses a risk of fraud, identity theft, and data breaches. The bill emphasizes proactive measures to protect consumer accounts from such threats.

Overall Impact

The bill aims to establish a framework for understanding and regulating AI in banking and finance to help institutions better protect their consumers. By fostering collaboration between regulators, financial institutions, and AI experts, the goal is to mitigate risks while leveraging the advantages that AI technologies can provide.

Relevant Companies

• JPM (JPMorgan Chase & Co.): As a major player in the banking sector, JPMorgan may need to adjust its AI and fraud prevention strategies in light of the new regulations proposed by this bill.
• BAC (Bank of America): This bank could be affected by the need to enhance its AI-based security measures and comply with best practices outlined in the Task Force's report.
• GS (Goldman Sachs Group, Inc.): As a significant investment bank, Goldman Sachs may have to review AI usage practices to align with any new legislative recommendations.