WASHINGTON–America’s Credit Unions has sent a pair of letters to Capitol Hill ahead of hearing on AI and fraud, respectively.
In its letter to the House Financial Services Subcommittee’s hearing on how AI and other technologies are shaping the future of finance, Jim Nussle, the trade group’s president and CEO wrote, “From managing internal procedures to AI chatbots, to underwriting assistance and fraud detection— credit unions are seeing firsthand how AI is increasing staff efficiency, automating previously laborious tasks, reducing paperwork, and expediting loan decision making processes.”
Nussle further told the committee that AI-powered fraud analytics can enhance credit union efforts to prevent financial crime and reduce Bank Secrecy Act compliance costs.
‘Balanced & Flexible’
The letter also stated that regulatory assessments of new technologies must embrace “balanced and flexible” approaches to risk management that can accommodate innovation while protecting consumers.
“For highly regulated financial institutions, such as credit unions, an appropriate regulatory framework should recognize the need for less prescriptive intervention and greater accommodation of innovation through pilot programs, no-action letters, waivers, and elimination of outdated rules,” Nussle wrote.
Letter on Fraud
Separately, in a letter to the House Financial Services Committee’s Oversight Subcommittee ahead of a hearing on fraud, America’s Credit Unions offered several suggestions, including;
- Adopting guidance to maximize the scope of permissible information sharing to target general financial fraud and any potential legislation should permit financial institutions to securely share payment fraud information within a legal framework
- Providing greater regulatory clarity over the parties responsible for payments fraud and liability, especially for electronic transfers. Any interpretative clarifications under Regulation E should be a formal notice of proposed rulemaking instead of issuing an interpretative rule
- Modernizing Regulation CC to better address check fraud that takes advantage of check processing vulnerabilities and limitations on hold times
- Issuing guidance to financial institutions that broadens the types of data that financial institutions may share and clarifies what circumstances are allowed in order to combat payments fraud
- Granting legal authority and liability protection when financial institutions are acting in good faith to decline services to protect members from fraudulent actors
- Ensuring that publication of best practices to prevent or detect fraud does not constitute a mandate to adopt specific technical solutions. Future guidance should be appropriately tailored to the complexity and activities of individual financial institutions.
