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Today, the House Financial Services Committee is holding a National Security, Illicit Finance, and International Financial Institutions Subcommittee hearing, led by Subcommittee Chairman Warren Davidson (OH-08), on how Congress can modernize our nation's anti-money laundering framework.

Read Subcommittee Chairman Davidson's opening remarks as prepared for delivery:

"I want to welcome our witnesses. Thank you for participating in our hearing today. 

"This hearing is the Subcommittee’s third hearing of the 119^th Congress on anti-money laundering. Last spring we examined the tools and techniques to combat fraud, and, in the fall, we heard from FinCEN Director, Andrea Gacki.

"Today we examine the Bank Secrecy Act itself, and how to modernize its architecture for today’s AML threat.

"The BSA was enacted in 1970 to target the abuse of our financial system by organized crime. Over the decades, it has become a bloated surveillance machine demanding endless reports without delivering proportional results.

"Every year, financial institutions file nearly 5 million suspicious activity reports, or SARs, and over 21 million currency transaction reports, CTRs, with FinCEN. That’s an average of 13,000 SARs and 59,000 CTRs every day.

"The SAR is typically filed when a financial institution has a transaction involves or aggregates $5,000 or more, and a CTR is filed on cash transactions involving more than $10,000. 

"These reporting thresholds have never been adjusted for inflation. $10,000, the initial threshold established in the 70s for CTRs, would be more than $80,000 today.

"And most CTRs aren’t even looked at – according to a December 2024 GAO report, law enforcement agencies accessed only 5.4 percent of CTRs filed between 2014 and 2023.

"Meanwhile, the BSA enforcement drives financial institutions to file copious amounts of defensive SARs that serve no meaningful law-enforcement purpose.

"It’s not only CTRs and SARs, however. Under the Biden Administration, the Corporate Transparency Act would have compelled 30 million small businesses to file beneficial ownership information with FinCEN.

"I am thankful that the Trump Administration has rolled this back. Nor does it stop with the CTA. For instance, FinCEN’s Residential Real Estate Rule would have added even more reports to its overflowing database.

"All this unused reporting amounts to a reflexive desire to grow the BSA haystack rather than find the money-laundering needle. So I was pleased to see FinCEN release its AML Program Notice of Proposed Rulemaking in April.

"While it is disappointing that the NPRM does not address CTR or SAR thresholds, it is a welcome attempt to shift away from check-the-box defensive compliance to recenter AML on true risk.

"Furthermore, its moves to increase FinCEN control over enforcement actions and raise the threshold for enforcement should help financial institutions trust that good-faith, risk-based compliance and actionable intelligence will now be rewarded over a focus on volume and paperwork technicalities.

"As we focus on risk, we must also ensure that tools like artificial intelligence are fully deployed to counter the AI-enabled crimes of today.

"A wait-and-see approach that distrusts rapidly maturing AI systems will tie financial institutions’ hands behind their back, letting the bad guys continue to move money at the speed of the Internet while law enforcement is stuck in the 70s.

"If we truly want to stop money laundering by the criminals, scammers, and terrorists of this century, not the last, it’s time we change course.

"Increased reporting thresholds, AI, and a commitment to prioritizing risk give us the tools to do so.

"Put simply, we can continue to pile up reports on lawful activity, or we can exchange volume for actionable intelligence. It’s time to make this trade."