HFSC Subcommittee Hearing with FinCEN Director Gacki — September 9, 2025

Subcommittee Chairman Davidson (R-OH) raised how, in recent years, the Bank Secrecy Act (BSA), Corporate Transparency Act (CTA), and Anti-Money Laundering (AML) Act have proven to be ineffective in some cases while always being cumbersome and burying illicit activity reports in paperwork.  He referenced how some safeguards do not provide security, but an invitation for abuse, citing Operation Chokepoint.  He also outlined the troubling status of the beneficial ownership information reporting regime, highlighting the need to assess how such a regime can be a tool for targeted reforms that enhance security without undermining privacy and innovation. He emphasized the need to index outdated CTR thresholds for inflation as well as codify the full repeal of the CTA’s beneficial ownership mandate on U.S. businesses, with a focus on external threats while demanding accountability.

Committee Chairman Hill (R-AR) praised Treasury’s interim rule issued in March that exempted U.S. companies from beneficial ownership reporting requirements as an important step toward easing regulatory burdens.  He noted how, in assessing the BSA’s performance over the past five decades, there are opportunities to modernize it and ensure it remains effective.  Director Gacki responded with how the present rule requires reports from foreign reporting companies that are not subject to any exemptions, and the requirements are only to report foreign beneficial owners.  She stated FinCEN’s intentions to finalize it in the upcoming year and how FinCEN is ensuring it has the administration’s guidance, as well as working through comments received on the interim final rule.

Director Gacki cited that an area necessary to modernize in the BSA regime is reporting, specifically Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs).  She discussed how FinCEN is currently exploring ways to streamline SAR and CTR reporting, including by improving the forms, which will be beneficial for law enforcement and national security data users as well as for filers, to further reduce the regulatory burden on U.S. entities.

Director Gacki highlighted FinCEN’s efforts to promote the administration’s goal of supporting the responsible growth and use of digital assets while acknowledging how digital assets, like other financial assets, are subject to misuse by illicit actors.  She noted that to unleash the full potential of digital assets in the U.S., certain measures should be adopted to deter illicit finance and combat financial crime, with one necessary measure being to faithfully and expeditiously implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. She stated that as FinCEN initiates rule-making efforts necessary to implement the GENIUS Act’s required regulations, it will continue ongoing engagement with the digital asset industry and law enforcement.

Representative Barr (R-KY) referenced the narrative among critics that the movement of transactions to the blockchain creates additional fraud risks and risks for criminal activity, asking Director Gacki how it can, in reality, assist law enforcement in preventing fraud, criminal activity, and money laundering. Director Gacki agreed that it does aid law enforcement and talked about how the blockchain actually brings transparency, and that with the right tools, it can be leveraged to help detect illicit transactions.

Committee Chairman Hill and others raised concerns about how geographic targeting orders have been a successful strategy in addressing shell companies and hidden assets, which requires real estate professionals to report all non-financed purchases of real estate.  Committee Chairman Hill cited how, according to FinCEN’s estimates, the real estate industry is expected to bear over $630 million in compliance costs, questioning the justifications of the cost relative to law enforcement goals being obtained.  Director Gacki discussed how FinCEN has been using the tool of geographic targeting orders for ten years and how it is a temporary measure that can only be renewed if there is a law enforcement need for that information.  She noted there has been such demand among law enforcement, driving the decision to make the temporary measure a permanent, widely applicable measure that is scheduled to take effect in December 2025.

Representative Liccardo (D-CA) raised the growing use of crypto ATMs and kiosks in money laundering and fraud, pointing to DeFi’s pseudonymity as a particular challenge for law enforcement and financial institutions.  He also raised how criminals can still exploit mixers to evade even sophisticated detection capabilities, as he questioned how agencies can maintain effective oversight when transactions bypass centralized exchanges. Representative Casten (D-IL) referenced FinCEN’s notice that emphasized the irreversibility of crypto transactions on ATMs and noted that there is a high level of noncompliance with AML laws from operators of crypto ATMs.

Director Gacki acknowledged the anonymity-enhancing aspects of digital assets while highlighting FinCEN’s utilization of blockchain analytic tools, while stressing the importance of tailoring mixer regulations to target illicit activity without hindering legitimate use cases. She stated that crypto ATMs are subject to the BSA, with some more compliant than others, as she emphasized how ensuring the industry is as compliant as possible is one of FinCEN’s key objectives.  She also pointed to ongoing implementation work under the GENIUS Act and the President’s Working Group recommendations as guiding efforts to extend BSA requirements into the DeFi space.

Committee Ranking Member Waters (D-CA) called for reviewing how the administration’s actions have weakened the U.S.’s capacity to stop money laundering and fraud, citing President Trump’s closure of the Consumer Financial Protection Bureau (CFPB) as well as the firing of government examiners, investigators, prosecutors, and inspectors.  She, alongside Subcommittee Ranking Member Beatty (D-OH), warned against the series of dangerous rollbacks in the U.S.’s illicit finance regulatory framework as they criticized how Republicans are crippling tools like the CTA and the Investment Advisers Act that are designed to fight crime and mitigate corruption.

Subcommittee Ranking Member Beatty raised how Treasury Secretary Bessent weakened the CTA, noting that President Trump signed it into law during his first term, by exempting over 99 percent of the companies that Congress intended the law to cover. She stated how the reversal eliminates a critical new tool for law enforcement to unmask anonymous shell companies and is effectively making the U.S. the preferred haven for money laundering, traffickers, and fraudsters. She was critical of how, instead of working with Congress to make key reforms to the CTA that would ease small business compliance concerns, the administration chose to directly ignore the law as it was passed and intended to be implemented by Congress on a bipartisan basis.