New York Moves to Rein In Frontier AI With Transparency & Reporting Rules

Key Takeaways

• State-Level AI Oversight Expands: New York is asserting regulatory authority over frontier AI development as federal AI governance remains fragmented.
• Transparency Becomes a Legal Obligation: Large AI developers must publicly document safety frameworks rather than rely on voluntary principles or internal controls.
• Incident Reporting Gets a Clock: The 72-hour reporting requirement formalizes rapid escalation expectations for AI-related harm.
• Regulatory Enforcement Is Explicit: The Attorney General’s authority to pursue civil penalties signals that AI governance is moving from guidance to enforceable compliance.
• DFS Enters the AI Governance Arena: The creation of a dedicated oversight office positions DFS as a central actor in supervising advanced AI systems alongside traditional financial risk.

Deep Dive

On December 22, Kathy Hochul signed the Responsible AI Safety and Evaluation Act, or RAISE Act, setting what state leaders describe as a nation-leading standard for transparency and accountability among developers of so-called frontier AI models. The legislation requires large AI developers to publicly document their safety practices and to notify the state within 72 hours when serious harm linked to their systems is identified.

Rather than aiming at everyday AI applications, the law focuses squarely on the most powerful models, the ones capable of large-scale deployment and systemic impact. Supporters say that focus reflects a growing recognition that traditional regulatory approaches are struggling to keep pace with the speed and complexity of frontier AI development.

“This law builds on California’s recently adopted framework,” Governor Hochul said in a statement, “creating a unified benchmark among the country’s leading tech states as the federal government lags behind.”

A New Oversight Structure Inside DFS

A central feature of the RAISE Act is the creation of a new oversight office within the New York State Department of Financial Services. The office will be responsible for assessing large frontier AI developers and issuing annual reports intended to give regulators, policymakers, and the public greater visibility into how these systems are governed.

DFS Acting Superintendent Kaitlin Asrow said the department already has experience balancing innovation with safeguards, particularly in financial services, and framed the new office as an extension of that role into the AI domain. The goal, she said, is to support responsible adoption rather than slow technological progress.

Reporting, Enforcement, and Penalties

The law gives the New York Attorney General authority to enforce the reporting and disclosure requirements. Developers that fail to submit required information, or that provide false statements, can face civil penalties of up to $1 million for an initial violation and up to $3 million for repeat offenses.

By tying transparency obligations to meaningful enforcement tools, lawmakers say the statute is meant to move beyond voluntary principles and into operational accountability. State Senator Andrew Gournardes described the law as an attempt to prove that innovation and public safety do not have to be mutually exclusive, arguing that unchecked AI development carries real risks for communities and institutions alike.

Assembly member Alex Bores went further, calling the RAISE Act the strongest AI transparency law in the country and saying it advances beyond California’s approach by demanding deeper disclosure and ongoing learning. He also framed the bill as a response to industry pressure and federal inaction, suggesting that states are now setting the pace for AI governance.

Part of a Broader AI Strategy

The RAISE Act also fits into a wider effort by New York to position itself as a global leader in ethical AI development. Under Governor Hochul, the state launched Empire AI, a consortium bringing together government, academia, and industry to advance AI research for the public good.

State officials say the new law is designed to ensure that innovation continues to thrive within that ecosystem, but with clearer expectations around transparency, safety, and accountability as AI systems become more powerful and more deeply embedded in economic and social life.

As debates over AI regulation continue to stall at the federal level, New York’s move underscores a broader shift toward state-led frameworks filling the gap and setting early benchmarks for what AI oversight may eventually look like nationwide.

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