On March 5, the House Financial Services Subcommittee on Financial Institutions held a hearing titled “Fighting Fraud on the Front Lines: Challenges and Opportunities for Financial Institutions.” The subcommittee examined methods financial institutions use to detect and prevent financial and payments fraud, as well as the regulatory and legal barriers they face. Witnesses from stakeholder industries discussed practical, regulatory and legal barriers that hinder detection, prevention and mitigation of fraudulent activity. The hearing also emphasized the need for improved information sharing between financial institutions, law enforcement, and other relevant economic actors.

The subcommittee also reviewed three proposed discussion drafts: (i) the TRACE Act of 2026, which would establish a framework to facilitate fraud-related information sharing among financial institutions to combat scams, identity theft, and cyber-enabled theft by amending the GLBA and the FCRA to permit data disclosure solely for fraud-prevention purposes while prohibiting its use for marketing or underwriting; (ii) the Bank Fraud Technology Advancement Act of 2026, which would direct federal banking agencies to study how advanced technologies, including AI, machine learning, predictive analytics, behavioral biometrics, and distributed ledger monitoring are used to detect and prevent fraud, with a focus on community banks and credit unions under $10 billion in assets; and (iii) the STOP Fraud Act of 2026, which would amend the Expedited Funds Availability Act to allow depository institutions to delay the availability of funds when they have “reasonable cause to believe” a check or wire transfer is fraudulent, and would transfer sole rulemaking authority under that act to the Fed.