Businesses could face steep penalties for using deepfakes or other artificial intelligence tools to illegally manipulate markets or to engage in securities fraud, under new legislation proposed Tuesday by a bipartisan pair of senators.
The bill by Virginia Democratic Sen. Mark Warner and Louisiana Republican Sen. John Kennedy represents a broad effort to grapple with the risks that AI could pose to the US financial system.
In addition to allowing the Securities and Exchange Commission to seek triple penalties against companies that use AI to violate the agency’s rules, the legislation would authorize multiple regulatory agencies to explore new ways to govern AI’s use in the financial sector.
For example, it directs a committee chaired by the Treasury Department to run a series of tabletop exercises aimed at testing the financial system’s resilience against disruptions from AI, potentially including automated trading algorithms.
The bill also directs the Financial Stability Oversight Council (FSOC) to coordinate various government efforts to study AI’s risks and to identify concrete recommendations that agencies could implement as rules or regulations, the senators said in a release.
“AI has tremendous potential but also enormous disruptive power across a variety of fields and industries – perhaps none more so than our financial markets,” Warner said in a statement. “The time to address those vulnerabilities is now.”
The bill comes days after FSOC warned for the first time that AI poses a risk to the financial system. Earlier this month, the Bank of England also issued a similar warning.
“AI is moving quickly, and our laws should do the same to prevent AI manipulation from rattling our financial markets,” Kennedy said. “Our bill would help ensure that AI threats do not put Americans’ investments and retirement dreams at risk.”
