ORIGINAL NEWS POST:
U.S. House Introduces AI Fraud Deterrence Act to Combat AI-Driven Financial Crimes
In an effort to address the growing threat of artificial intelligence (AI) in financial crimes, U.S. Representatives Ted Lieu and Kevin Kiley, both of California, have introduced the “AI Fraud Deterrence Act” to Congress. The bipartisan bill, unveiled on November 14, 2024, proposes enhanced penalties for crimes such as mail fraud, wire fraud, bank fraud, and money laundering when committed using AI technology.
Stronger Penalties for AI-Enabled Fraud
The legislation amends Title 18 of the U.S. Code to raise fines and prison terms tied to fraud schemes that use AI. It doubles fines for mail and wire fraud from $1 million to $2 million and allows courts to impose prison sentences of up to 20 years. For bank fraud, the bill raises the potential penalty to $2 million and increases the maximum sentence to 30 years.
Money laundering cases involving AI would also face stricter consequences. Offenders could pay fines of $1 million or three times the funds involved, whichever amount is larger. They could also face up to 20 years in prison. These measures aim to deter criminals who use AI to scale or disguise financial misconduct.
Clear Definition of AI Use in Crimes
The bill adopts the definition of artificial intelligence in the National Artificial Intelligence Initiative Act of 2020. This definition covers systems that perform tasks traditionally requiring human intelligence, including learning, reasoning, and problem-solving. Lawmakers included this language to ensure consistent interpretation across federal statutes.
Crucially, the bill states that offenders cannot avoid responsibility by claiming they did not know AI played a role in their actions. Whether a person uses AI created in-house or tools obtained from outside sources, the penalties apply if AI contributes to the crime.
Growing Concerns About AI-Enabled Fraud
Lawmakers introduced the bill as fraud schemes become more sophisticated through AI tools. Criminals now use AI to create convincing phishing emails, mimic human behavior during financial transactions, and exploit weaknesses in automated systems. Cybersecurity analysts warn that these tools make it harder for investigators to detect or trace illegal activity.
Representative Lieu underscored the urgency of the issue when announcing the bill. He noted that AI’s benefits come with significant risks, and Congress must ensure strong consequences for those who weaponize the technology for financial gain.
Safeguards for Innovation
To avoid discouraging legitimate AI development, the bill targets only those who intentionally use AI to commit financial crimes. Lawmakers argue that this approach supports innovation while reinforcing accountability. The bill has been referred to the House Judiciary Committee for further review, marking the first step in the legislative process.
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