Bank Fraud Technology Advancement Act of 2026

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8671 Introduced in House (IH)]

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119th CONGRESS
  2d Session
                                H. R. 8671

 To require the Federal banking agencies to conduct a study on the use
   of advanced technologies in fraud detection and prevention, with
particular attention to community financial institutions, and for other
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 7, 2026

  Mr. Flood introduced the following bill; 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 prevention, with
particular attention to community financial institutions, and for other
                               purposes.

    Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Bank Fraud Technology Advancement
Act of 2026''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Advanced fraud detection technology.--The term
        ``advanced fraud detection technology'' includes artificial
        intelligence, machine learning, predictive analytics,
        behavioral biometrics, network analytics, data fusion tools,
        distributed ledger-based monitoring tools, blockchain tracing
        tools, and other emerging technologies used to detect, prevent,
        or mitigate financial fraud.
            (2) Artificial intelligence.--The term ``artificial
        intelligence'' has the meaning given that term in section 5002
        of the National Artificial Intelligence Initiative Act of 2020
        (15 U.S.C. 9401).
            (3) Credit union.--The term ``credit union'' means a State
        credit union or Federal credit union, as such terms are
        defined, respectively, in section 101 of the Federal Credit
        Union Act (12 U.S.C. 1752).
            (4) Federal banking agency.--The term ``Federal banking
        agency''--
                    (A) has the meaning given such term in section 3 of
                the Federal Deposit Insurance Act (12 U.S.C. 1813); and
                    (B) means the National Credit Union Administration.
            (5) Insured depository institution.--The term ``insured
        depository institution'' has the meaning given such term in
        section 3 of the Federal Deposit Insurance Act (12 U.S.C.
        1813).
            (6) Machine learning.--The term ``machine learning'' has
        the meaning given that term in section 5002 of the National
        Artificial Intelligence Initiative Act of 2020 (15 U.S.C.
        9401).

SEC. 3. STUDY ON ADVANCED TECHNOLOGIES IN FRAUD DETECTION AND
              PREVENTION.

    (a) In General.--The Federal banking agencies, in consultation with
the Secretary of the Treasury, the Financial Crimes Enforcement
Network, the Federal Trade Commission, the Bureau of Consumer Financial
Protection, and appropriate law enforcement agencies, shall jointly
conduct a comprehensive study on the use of advanced fraud detection
technology by insured depository institutions and credit unions.
    (b) Required Elements.--The study required under subsection (a)
shall evaluate the following:
            (1) Current use and effectiveness.--The current use and
        effectiveness of advanced fraud detection technology,
        including--
                    (A) the extent to which insured depository
                institutions and credit unions of varying asset sizes
                deploy advanced fraud detection technology;
                    (B) measurable outcomes relating to fraud
                reduction, loss mitigation, and consumer protection;
                and
                    (C) barriers to adoption, including cost,
                interoperability constraints, regulatory uncertainty,
                data access limitations, and liability concerns.
            (2) Community financial institution access.--Community
        financial institution access to advanced fraud detection
        technology, including--
                    (A) challenges faced by community financial
                institutions in accessing or deploying advanced fraud
                detection tools;
                    (B) whether economies of scale disadvantage smaller
                community financial institutions relative to large
                community financial institutions;
                    (C) options to facilitate shared services, utility
                models, managed-service providers, or consortium-based
                fraud detection platforms; and
                    (D) recommendations to ensure regulatory guidance
                is appropriately tailored to avoid discouraging
                adoption by smaller community financial institutions.
            (3) Artificial intelligence and machine learning.--
        Artificial intelligence and machine learning, including--
                    (A) the use of artificial intelligence and machine
                learning models, applications, and tools in detecting
                fraud patterns, anomalies, synthetic identity fraud,
                and real-time payment fraud;
                    (B) governance frameworks used by insured
                depository institutions and credit unions to manage
                fraud model risk, explainability, and validation; and
                    (C) interactions between fraud detection models and
                consumer protection laws.
            (4) Information sharing and public-private partnerships.--
        Information sharing and public-private partnerships,
        including--
                    (A) the effectiveness of existing information-
                sharing frameworks;
                    (B) whether expanded public-private partnerships or
                centralized fraud utilities would enhance detection
                capabilities;
                    (C) the feasibility of a voluntary fraud analytics
                consortium accessible to community financial
                institutions; and
                    (D) privacy, data protection, and cybersecurity
                considerations associated with expanded data sharing.
            (5) Payments system risks.--Payments system risk,
        including--
                    (A) fraud risks associated with electronic funds
                transfers and checks; and
                    (B) whether advanced analytics can reduce fraud
                while preserving settlement finality and payment system
                stability.
            (6) Regulatory and supervisory considerations.--Regulatory
        and supervisory considerations, including--
                    (A) whether existing supervisory expectations
                create barriers to innovation;
                    (B) the need for interagency guidance, regulatory
                clarity, or safe harbors to support technology
                adoption;
                    (C) opportunities to harmonize expectations across
                Federal banking agencies; and
                    (D) whether additional training for Federal banking
                agencies staff is necessary to promote effective
                regulation and supervision of financial institutions'
                use of advanced fraud detection technology, especially
                for community financial institutions.
    (c) Report and Recommendations.--
            (1) Report.--Not later than 18 months after the date of
        enactment of this Act, the Federal banking agencies shall issue
        a report to the Committee on Financial Services of the House of
        Representatives and the Committee on Banking, Housing, and
        Urban Affairs of the Senate containing all findings and
        determinations made in carrying out the study required under
        this section, and make such report publicly available, except
        for classified or supervisory information.
            (2) Recommendations.--The report required under paragraph
        (1) shall include legislative, regulatory, or supervisory
        recommendations which may include--
                    (A) proposals to support shared fraud detection
                utilities or consortium-based analytics platforms;
                    (B) guidance or safe harbors to encourage
                responsible artificial intelligence use in fraud
                prevention;
                    (C) pilot programs tailored to community financial
                institutions; and
                    (D) recommendations to strengthen public-private
                information sharing consistent with privacy and civil
                liberties protections.

SEC. 4. COMMUNITY BANK FRAUD TECHNOLOGY PILOT PROGRAM.

    (a) In General.--Not later than 1 year after submission of the
study under section 3, the Federal banking agencies may jointly
establish a voluntary pilot program to facilitate community financial
institution access to advanced fraud detection tools.
    (b) Program Features.--The pilot program described in subsection
(a) may include--
            (1) pooled procurement or shared services models;
            (2) model validation assistance or technical support;
            (3) standardized vendor risk management templates;
            (4) regulatory clarity regarding model governance
        expectations; and
            (5) collaboration with the Department of the Treasury and
        law enforcement to provide anonymized fraud typology data
        feeds.
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