Briefly
TRM Labs’ Ari Redbord advised a Home subcommittee that the Financial institution Secrecy Act is “structurally incapable” of maintaining tempo with AI-enabled monetary crime.
The listening to got here two days after Trump signed an government order increasing BSA buyer due diligence guidelines to flag accounts tied to undocumented immigrants.
Witnesses had been break up between full repeal, focused reform, and modernization with stronger information-sharing.
Crypto executives, coverage researchers, and nationwide safety consultants testified earlier than a Home subcommittee on Thursday on methods to modernize anti-money laundering legal guidelines for an period of AI and digital property.
The Home Monetary Companies Committee’s Nationwide Safety, Illicit Finance, and Worldwide Monetary Establishments Subcommittee held a listening to on Modernizing the BSA for Monetary Crime within the twenty first Century, revisiting the Financial institution Secrecy Act, the 1970 legislation that requires banks and monetary establishments to report suspicious exercise and enormous transactions.
The listening to landed as crypto corporations, banks, and civil liberties teams push to refocus the BSA on actionable intelligence over reporting quantity, whereas the Trump administration broadens its attain over non-citizen prospects.
TRM Labs World Head of Coverage Ari Redbord, testifying earlier than the Subcommittee, advised lawmakers that North Korea stole over $2 billion in digital property in 2025 and one other $600 million in early 2026, whereas pig butchering networks stripped greater than $35 billion from People final 12 months.
Redbord warned that AI-enabled rip-off exercise surged 500% over the previous 12 months whereas illicit funds now transfer throughout wallets inside 24 to 48 hours, compressing response home windows to the purpose the place “retrospective reporting frameworks are structurally incapable of producing a response in time” as a result of “the framework that helped us win yesterday is not going to be sufficient to win right now.”
What’s the Financial institution Secrecy Act?
The Financial institution Secrecy Act is the spine of U.S. anti-money laundering legislation, requiring banks and crypto corporations registered as cash companies companies to file suspicious exercise stories, foreign money transaction stories for quantities over $10,000, and to confirm buyer identities.
Subcommittee Chairman Warren Davidson (R-OH) opened by calling the BSA a “bloated surveillance machine demanding countless stories with out delivering proportional outcomes,” noting establishments file almost 5 million SARs and 21 million CTRs yearly.
Redbord pitched formal recognition for stablecoin monetary intelligence items like T3 FCU, a Tether–TRON–TRM collaboration that has frozen over $450 million in illicit USDT since September 2024, and a “digital asset maintain legislation” giving exchanges a statutory secure harbor to freeze suspect funds pending legislation enforcement overview.
Additionally, he famous how establishments ought to maintain “the least quantity of data that they want on a person buyer with a view to decide” about illicit danger, warning that each new database is “a honeypot” for ransomware teams and state hackers.
In the course of the listening to, Cato Institute researcher Nicholas Anthony mentioned the issue with BSA was not inefficiency however surveillance itself, saying “the historical past of monetary surveillance has been a historical past of ever-moving goalposts” from tax enforcement to “fraud and immigration,” whereas laying out choices starting from inflation-adjusting thresholds to repealing the BSA regime totally.
John Courtroom, basic counsel on the Financial institution Coverage Institute, backed reform quite than repeal, calling Treasury’s proposed AML rule “an enormous enchancment” and urging greater reporting thresholds, less complicated filings, risk-based oversight, and express approval for banks to make use of AI in transaction monitoring.
Atlantic Council Senior Fellow Carole Home pushed again on deep cuts to the framework, noting that lowering compliance burden mustn’t come at the price of “opening the door to adversaries searching for to hurt People and U.S. nationwide safety pursuits.”
AI was a degree of consensus amongst most witnesses.
Davidson, Redbord, Carole Home, and Courtroom all backed broader use of machine studying and AI in transaction monitoring. Redbord pushed hardest, telling lawmakers that “AI investigative instruments can compress weeks of handbook evaluation into minutes” and calling for federal funding of AI-native investigative instruments throughout IRS-CI, FinCEN, OFAC, FBI, DEA, Secret Service, and HSI.
The listening to arrived solely days after President Donald Trump signed an government order directing regulators to strengthen buyer due diligence and buyer identification necessities below the BSA whereas increasing scrutiny round account possession and monetary dangers related to immigration enforcement.
The order directs Treasury to tighten BSA buyer due diligence guidelines and flag dangers tied to ITIN use, off-the-books wages, and overseas consular IDs, whereas additionally asking the CFPB to weigh potential deportation dangers in lending choices.
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