This bill, titled the "Unleashing AI Innovation in Financial Services Act," mandates that each financial regulatory agency establish or designate an AI Innovation Lab . These labs are designed to enable regulated entities to experiment with financial products or services that substantially use artificial intelligence, referred to as "AI test projects." The primary purpose is to allow such experimentation without the burden of unnecessary regulation or the expectation of enforcement actions, provided an application is approved. Regulated entities can submit applications to their appropriate financial regulatory agency, detailing their proposed AI test project. Each application must include an alternative compliance strategy , identifying specific regulations to be waived or modified and proposing an alternative method for compliance. This strategy must demonstrate how the project serves the public interest, improves consumer access or protection, enhances efficiency, fosters innovation, or improves risk management, without presenting systemic or national security risks, and while adhering to anti-money laundering obligations. Agencies are required to review applications within 120 days, with a possible 120-day extension, and provide a written determination. If approved, the agency will specify the terms of the alternative compliance strategy, the project's termination date, and any limitations on its size or scope. During the approved period, the agency can only enforce the waived regulation as outlined in the alternative strategy, and other financial regulatory agencies generally cannot enforce it, though enforcement for fraud or unsafe practices remains possible. If an application is denied, the agency must provide a written explanation, and no enforcement action related to the proposed project can occur for 30 days. Entities may resubmit amended applications, but are limited to two substantially similar resubmissions after a denial. Agencies retain the authority to seek injunctive relief if an AI test project poses an immediate danger to consumers or investors, risks financial markets, or threatens national security or anti-money laundering efforts. Within 180 days of enactment, each financial regulatory agency must promulgate regulations outlining procedures for modifying projects, consequences for non-compliance, and ensuring projects last at least one year. Additionally, agencies must submit annual reports to Congress for eight years, detailing aggregated findings, trends, and lessons learned from AI test projects, while protecting proprietary information.