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Today, the House Financial Services Committee’s Subcommittee on National Security, Illicit Finance, and International Financial Institutions, led by Subcommittee Chairman Warren Davidson (OH-08), is holding a hearing to examine FinCEN’s operations and efforts to reform costly, burdensome, and ineffective anti-money laundering and beneficial ownership reporting requirements.

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

" Our witness today is FinCEN Director Andrea Gacki. Director, welcome, and thank you for making time among all your travels to be with us today.

"This is the fourth hearing with the director of FinCEN, as required by Section 5336(c)(11) of the Corporate Transparency Act. 

"Today provides a public forum to examine FinCEN's operations, the troubled status of the Beneficial Ownership Information reporting regime, the Anti Money Laundering Act of 2020, and the history and impact of the Bank Secrecy Act.

"The Bank Secrecy Act was enacted in 1970 to address organized crime's infiltration of our financial system. In the half-century since, it has grown into a bloated surveillance apparatus 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. These reporting thresholds have never been adjusted for inflation.

"Worse GAO reports that only 5.4 percent of CTRs are even looked at by law enforcement while BSA enforcement drives financial institutions to file copious amounts of defensive SARs that serve no meaningful law-enforcement purpose.

"What does all this reporting achieve? Only 1 percent of laundered proceeds are ever intercepted.

"And it comes with real costs – the BSA compliance reportedly costs $52 billion each year.

"That is why 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, and we hope you do in the final rule, this effort is a welcome attempt to shift away from check-the-box defensive compliance to recenter AML on true risk.

"Now I would like to turn to the Corporate Transparency Act. Under the Biden Administration, implementation followed the same pattern of growing the haystack of reports rather than finding the money-laundering needle.

"FinCEN issued overbroad rules that treated every mom-and-pop shop around the country as potential money launderers, forcing disclosure of personally identifiable information into a federal database that isn’t safeguarded against hacks or misuse. 30 million small businesses were required to file.

"To get a sense of how absurd this is, consider an HOA with a volunteer board and presidency that changes every few months.

"The Biden Treasury would have compelled that HOA to file personally identifiable information on all these officers, and update it every time it changed, in the off chance one of them was engaged in money laundering.

"Replicate that over the entire country and you get the sense that Big Brother is watching you.

"I am thankful that the Trump Administration has rolled this all back. And I’m grateful that my colleagues on this Committee voted to advance my Repealing Big Brother Overreach Act to codify the Administration’s rule.

"As we work on the legislation, we look forward to FinCEN finalizing the rule.

"But the BSA haystack doesn’t stop at beneficial ownership. For instance, FinCEN’s Residential Real Estate Rule would have added even more reports to its overflowing database, imposing a nationwide burden on title agents.

"It shouldn’t be hard for everyone here to agree that all these reporting requirements produce a lot of noise while burying the signal. The result is a costly and ultimately ineffective framework.

"I’m glad to see the Trump Administration taking some steps toward reform, and I hope you will ensure that they ultimately produce better outcomes for law enforcement while simultaneously reducing costs for financial institutions and the businesses and individuals who use their services."