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.
The legislation seeks to amend existing laws under Title 18 of the United States Code to impose stricter penalties on perpetrators who leverage AI to commit financial crimes. For example, fines for mail and wire fraud are doubled from $1 million to $2 million, and offenders using AI could face up to 20 years in prison. For bank fraud, penalties are even steeper, with potential fines of $2 million and up to 30 years of imprisonment.
Money laundering violations carried out with AI assistance would also incur harsher punishments. Offenders could face fines of up to $1 million or three times the value of the funds involved, whichever is greater, and up to 20 years of imprisonment.
To ensure clarity, the bill adopts the definition of AI provided in the National Artificial Intelligence Initiative Act of 2020. This definition emphasizes the use of AI systems capable of performing tasks traditionally requiring human intelligence, such as learning, reasoning, and problem-solving.
The bill explicitly states that offenders cannot absolve responsibility by claiming ignorance of AI’s role in their actions. Whether developed in-house or obtained from external sources, the deployment of AI in facilitating financial crimes will lead to severe legal repercussions.
The introduction of the “AI Fraud Deterrence Act” underscores lawmakers’ concerns over AI’s potential misuse in criminal activities. AI technologies, while advancing industries and improving efficiency, have also enabled sophisticated fraud schemes. Criminals now use AI tools to generate convincing phishing emails, simulate human behavior in financial transactions, and exploit vulnerabilities in automated systems.
According to cybersecurity experts, the integration of AI into criminal operations amplifies the scale and complexity of fraud, making it harder to detect and prosecute offenders under traditional legal frameworks. Representative Lieu highlighted this challenge in a statement accompanying the bill: “AI’s potential to revolutionize industries comes with risks that cannot be ignored. This legislation ensures that those who weaponize AI for financial gain face consequences commensurate with the damage they inflict.”
The bill also seeks to establish safeguards that address concerns about overregulation stifling innovation. By targeting bad actors specifically, the legislation aims to preserve AI’s legitimate uses while deterring its exploitation for criminal purposes. The “AI Fraud Deterrence Act” has been referred to the House Judiciary Committee for review.
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