HOUSE FINANCIAL SERVICES COMMITTEE
SUBCOMMITTEE HEARING
For questions on the note below, please contact the Delta Strategy Group team.
On July 21, the House Financial Services Committee Subcommittee on National Security, Illicit Finance, and International Financial Institutions held a hearing entitled “Oversight of the Financial Crimes Enforcement Network.” The witness in the hearing was Andrea Gacki, Financial Crimes Enforcement Network (FinCEN) Director, with her testimony available here.
Below are several key takeaways from the hearing prepared by Delta Strategy Group.
KEY TAKEAWAYS
- FinCEN’s Proposed Anti-Money Laundering & Countering the Financing of Terrorism (AML/CFT) Program Rule: Discussions highlighted efforts to modernize the Bank Secrecy Act (BSA) regime by reforming AML/CFT programs to focus on effectiveness rather than solely technical compliance. Multiple Representatives emphasized that FinCEN must strike the right balance in the forthcoming final rule, reducing unnecessary compliance burdens on financial institutions while ensuring reporting continues to provide the critical information law enforcement needs to detect, combat, and deter criminal activity.
- Suspicious Activity Report (SAR) & Currency Transaction Report (CTR) Requirements and Thresholds: Several Representatives raised whether the CTR threshold should be updated within FinCEN’s BSA Modernization Initiative. Comments broadly questioned whether current SAR and CTR requirements continue to support an effective AML framework and justify the associated compliance burdens relative to the value they provide to law enforcement.
- FinCEN’s Stablecoin AML & Customer Identification Program (CIP) Proposal: Discussions referenced FinCEN’s proposed AML/CFT and sanctions obligations for permitted payment stablecoin issuers (PPSIs) under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. FinCEN Director Gacki was asked whether Circle’s response to potentially suspicious or illicit accounts highlighted a gap in stablecoin issuers’ authority and whether Treasury’s rulemaking under the GENIUS Act addresses that issue.
OPENING STATEMENTS
Committee Chairman French Hill (R-AR)
FinCEN sits at the center of our efforts to combat money laundering, terrorist financing, fraud, scams, and other illicit financial activity that undermine our financial system. Hopefully, we will get some answers as to why FinCEN has not revised BSA reporting thresholds as part of its effort to update AML standards, as doing so is necessary to allow financial institutions to truly focus on risk. As financial crimes grow more sophisticated, our framework needs to keep pace without imposing unnecessary burdens on U.S. businesses.
Subcommittee Chairman Warren Davidson (R-OH)
BSA has grown into a bloated surveillance apparatus, commanding endless reports without delivering proportional results. Financial institutions file nearly five million SARs and over 21 million CTRs every year that serve no meaningful law enforcement purpose. These reporting thresholds have never been adjusted for inflation and GAO reports that only 5.4 percent of CTRs are even looked at by law enforcement. The metric has become how many are filed instead of whether they are effective. Only one percent of laundered proceeds is ever intercepted, with BSA compliance reportedly costing $52 billion each year. I was pleased to see FinCEN release its AML Program Notice of Proposed Rulemaking in April. While it is disappointing that the rulemaking does not address CTR and SAR thresholds, and we hope it will do so in the final rule, this effort is a welcome attempt to shift away from check-the-box, defensive compliance and recenter AML on true risk. Under the Biden administration, CTA implementation followed the same pattern of growing the haystack of reports rather than finding the money laundering needle. FinCEN issued overly broad rules that treated every mom-and-pop shop around the country as a potential money launderer. As we work on the Repealing Big Brother Overreach Act, we look forward to FinCEN finalizing the rule. BSA does not stop with the troubled status of the beneficial ownership information reporting regime.
Subcommittee Ranking Member Joyce Beatty (D-OH)
I am deeply concerned by recent efforts that would weaken our illicit finance safeguards and undermine decades of bipartisan progress in combating financial crime. These efforts include proposals to significantly narrow BSA requirements, attempts to weaken or repeal the CTA, efforts to postpone and reopen the investment adviser rule, and advancement of crypto legislation that contains major illicit finance gaps. Taken together, these actions would make it easier for bad actors to exploit our financial system while making it harder for law enforcement to identify and stop them. According to FBI data, Americans lost nearly $21 billion in cyber-enabled crimes in 2025, up from $16 billion in 2024. Criminal organizations are increasingly using cryptocurrency, AI, and other emerging technologies to make scams more sophisticated, move money across borders more quickly, and evade traditional detection methods. This administration’s and Republicans’ rollbacks would not only increase the risk of fraud and abuse, but would also weaken the broader AML/CFT framework and leave the U.S. with fewer tools to respond.
Andrea Gacki, Director, Financial Crimes Enforcement Network (FinCEN)
FinCEN is undergoing efforts to modernize the BSA regime to address the illicit finance threats of today and ensure we are well-positioned to adapt to new risks, working closely with law enforcement and other partners to support the administration’s whole-of-government approach to unleash every available tool to stop criminal networks. Since its inception in 2015, FinCEN’s Rapid Response Program (RRP) has facilitated the interdiction and repatriation of nearly $2 billion in stolen proceeds. FinCEN severed the Huione Group, responsible for laundering at least $4 billion in illicit proceeds, from the U.S. financial system in October 2025, and took follow-on action last month against Huione Group’s successor entities. In support of the White House Task Force to Eliminate Fraud, and under the leadership of Secretary Bessent, FinCEN has taken decisive action to identify typologies associated with fraud schemes. We provided expert analysis of potentially fraudulent activity for law enforcement, trained government stakeholders on how to use BSA data in investigations, and issued guidance making it clear how financial institutions can share information on fraud with each other in real-time. A modernized BSA regime is critical to protecting the financial system against emerging threats while ensuring financial institutions are not spending time and money reporting activity of little to no value to law enforcement. FinCEN’s SARs Frequently Asked Questions (FAQs) issued last October clarify certain SAR obligations to help financial institutions focus their resources on providing law enforcement with the most critical information needed to detect, combat, and deter criminal activity. In April, FinCEN issued a proposed rule to fundamentally reform AML/CFT programs under the BSA by refocusing AML/CFT programs on effectiveness rather than mere technical compliance. The proposed Program Rule also proposes a new role for FinCEN in the supervisory process to promote risk-based, reasonably designed programs and greater consistency in how banks are evaluated for effectiveness. FinCEN has issued two proposed rules to implement AML and customer identification program requirements for PPSIs as required by Congress under the GENIUS Act. The proposed obligations are designed to be fit for purpose, assist law enforcement, and minimize unnecessary burden. More here.
DISCUSSION
BSA Modernization & AML Program Rule
Subcommittee Chairman Davidson (R-OH): What is your timeline for issuing a final rule on the administration’s proposed AML program rulemaking? Gacki: FinCEN is working diligently on the proposed rules issued, with BSA modernization being one of the key administration priorities at Treasury. FinCEN is working hard to resolve any policy questions and bring these rules to finalization as quickly as possible. A final rule can be expected very soon.
Subcommittee Chairman Davidson: Will you address the administration’s request that, under KYC provisions, Americans know whether their customers are lawfully present in the U.S.? Gacki: Under the recent Executive Order on financial integrity, the President directed FinCEN to play a role, including with certain regulatory requirements involving the Customer Due Diligence Rule and Customer Identification Program requirements. We are working with the administration and Treasury officials to maintain those commitments.
Subcommittee Ranking Member Beatty (D-OH): If financial institutions report that AML examinations remain focused on process rather than outcomes, despite AMLA shifting the focus of the BSA, how could cross-agency training for examiners on the BSA mission and the AML/CFT priorities help address these concerns? Gacki: FinCEN is hearing the same concerns from financial institutions who want a stronger feedback loop with law enforcement to justify the resources they expend on their AML/CFT programs. We hope to address some of these concerns through our open rulemaking on the AML/CFT Program Rule, which would fundamentally reform AML/CFT programs across eleven different types of financial institutions and more than 350,000 financial institutions regulated by FinCEN and prudential regulators. We are working to ensure AML/CFT programs focus on what really matters, moving beyond technical compliance. For banks, the proposal would give FinCEN a new role in providing greater consistency in the supervisory and enforcement process. FinCEN is dedicated to improving the feedback loop between law enforcement and the financial sector, such as through the FinCEN Exchange, a public-private partnership through which FinCEN convenes law enforcement and financial institutions to create a more direct connection.
Committee Ranking Member Waters (D-CA): When the rulemaking implementing AMLA’s national AML/CFT priorities is completed, will banks be required to monitor for indicators of corruption as one of FinCEN’s eight priorities in their customers and transactions, including those involving companies owned or controlled by the President and his family? Gacki: FinCEN is currently in the rulemaking stage for the AML/CFT Program Rule. Upon completion of that rulemaking, we will turn to the AML/CFT priorities, which are due to be updated. FinCEN’s mission is to protect the U.S. financial system against illicit finance and that is what I commit to you that we will continue to do.
Representative Vargas (D-CA): If FinCEN’s modernization of the BSA regime is intended to move away from technical compliance and focus on better outcomes, how will that address concerns from banks that current compliance requirements are heavily bureaucratic and often consist of technical requirements that, in their view, have no value? Gacki: Financial institutions have consistently said they want to make sure what they are doing is actually helping law enforcement and national security. They want improved feedback loops to make sure the reports that FinCEN is asking for are actually useful. Striking the right balance between burden and benefit when it comes to reports like CTRs is something we are actively evaluating.
SAR & CTR Thresholds & Reporting Burdens
Subcommittee Ranking Member Beatty: How is FinCEN implementing the Anti-Money Laundering Act’s (AMLA) requirement to streamline and reduce compliance burdens, as well as enhance the effectiveness of SARs and CTRs, given that there has been no resolution since the AMLA became law and that the discussion has largely focused on reporting thresholds? Gacki: FinCEN is working to strike the right balance between burden and law enforcement needs for SARs. FinCEN is reviewing not only thresholds, but also the types of information requested through SARs and CTRs. We are discussing thresholds and reporting requirements with Treasury leadership while consulting financial institutions and law enforcement. This is one of FinCEN’s highest priorities as part of the BSA Modernization Initiative. FinCEN issued SAR Frequently Asked Questions last October to alleviate burdens for financial institutions, which FinCEN has heard anecdotally has saved thousands, if not millions, of dollars.
Representatives Lucas (R-OK), Sessions (R-TX), Barr: If the current CTR $10,000 threshold has not been updated since 1970 and is no longer relevant today, how can AML programs be more efficient if they are not receiving only the reports they need? Why were threshold changes not included in the AML program notice of proposed rulemaking? Gacki: We have received comments, including from Committee members, regarding AML/CFT thresholds in connection with the AML/CFT Program Rule. Because that remains an open rulemaking, I cannot comment on it but can assure you that the requirements and thresholds for SARs and CTRs are being discussed at the highest levels of Treasury leadership. We are consulting with financial institutions and law enforcement, and we hope to bring this to resolution soon.
Digital Assets & Stablecoins
Committee Chairman Hill (R-AR): Why did Circle state that it could not freeze and burn potentially suspicious and illicit accounts in its dollar-backed stablecoin without a government order when other financial institutions regularly act after identifying suspicious activity? Does Circle lack the authority to take those actions on its own, or does this reflect a gap in the current regulatory framework governing stablecoin issuers? Gacki: This is something I am not tracking and would be happy to look into further. Both FinCEN and our sister agency, the Office of Foreign Assets Control (OFAC), have a role under the GENIUS Act. The proposed rule would apply to PPSIs and would place AML/CFT and sanctions obligations directly on them.
Representative Foster: Given reports that Circle did not intervene to freeze allegedly stolen funds moving through its USDC stablecoin network, even though its user terms state it can freeze tokens at its sole discretion and Tether has exercised similar authority in some circumstances, is this an area where Congress should provide greater clarity regarding the authority and expectations for stablecoin issuers to respond to suspected illicit activity? Gacki: My colleagues at Treasury work very closely with stablecoin issuers, like Tether, to freeze and seize assets. I would like to understand this a little bit more before I can provide an answer.
Representative Casten (D-IL): Given that the FBI reported Americans lost $388 million to crypto ATM scams last year and FinCEN has acknowledged that crypto ATMs are attractive to scammers, with high rates of AML non-compliance, would you support legislation requiring crypto ATM companies to register as money transfer businesses (MSBs), maintain updated lists of locations, verify customer identities, and report suspected fraudulent activity? Gacki: I defer to Congress on any legislation and would be happy to provide technical support as needed. Crypto ATMs are something FinCEN has been very focused on, including through the alert. They are money services businesses (MSBs) that are required to register with FinCEN.
Representative Foster: Given that Bitcoin ATMs are frequently used as the payout vector for scams and other fraud, have you examined whether states that have banned Bitcoin ATMs or imposed limits on transaction size have seen different outcomes than states that continue to allow them? Is that an approach Congress should consider? Gacki: Written response for the record.
Subcommittee Chairman Davidson: Since FinCEN’s 2013 and 2019 guidance concluded that technology providers that only supply non-custodial software or hardware and never obtain independent control over customer value are not money transmitters, will FinCEN preserve that distinction as it coordinates with FATF on upcoming international standards? Gacki: Written response for the record.
FinCEN Authorities, Enforcement Tools, & Operations
Representative Lucas: Can you provide an update on FinCEN’s repatriation efforts through the RRP, and what barriers still need to be addressed? Gacki: FinCEN is very proud of RRP as a partnership among law enforcement, the financial sector, and international partners. Since I last testified, FinCEN has interdicted $152 million and recovered $38.5 million for 381 U.S. victims. Since 2015, FinCEN has interdicted more than $1.8 billion and recovered more than $1 billion for more than 6,000 U.S. victims. This is a great program that FinCEN has, but it is not our only way of combating fraud as the single largest source of illicit proceeds in the U.S.
Representative Casten: Given that FinCEN previously undertook a rulemaking process to address Huione, has that action been effective and has it had an impact beyond Huione? Do you have to go through that rulemaking process each time to address similar actors? Gacki: It is something FinCEN is very focused on. One way we address it is by using the tools given to us by Congress to go after some of the central nexus points. We used our Section 311 authority to go after Huione, and it has been very effective. However, we have had to redeploy that authority as they try to pivot, create new names, and evade the controls put in place under it. We do the best we can with the authorities we have.
Representative Casten: Will you work with the Committee to refine proposed bipartisan legislation so FinCEN can act more quickly against financial fraud without first identifying the specific underlying activity? Gacki: Absolutely.
Representative Foster (D-IL): Is FinCEN working to address the identity and authorization challenges posed by the rise of agentic AI? Does it have the personnel and budget needed? Gacki: Looking at agentic AI, both incorporating it into our systems to make sure we are using it as efficiently as possible and using it to support law enforcement, is something we are working on. We are looking at the threats of agentic AI, especially as they relate to identity and what guidance we could provide. We are working across the government on these important issues. In our FY2027 budget request, we are seeking additional resources for AI and advanced technologies.
Representative Nunn (R-IA): How can Congress better equip FinCEN and law enforcement to identify bad actors and pursue illicit shell companies through targeted legislation, such as the GUARD Act and the TRAPS Act, without expanding compliance burdens on legitimate businesses? Gacki: To date, financial institutions have filed more than 850,000 SARs totaling more than $443 billion in reported suspicious activity. This is an area of sustained attention and highest priority at FinCEN. We are robustly engaging with law enforcement.
Corporate Transparency Act & Beneficial Ownership
Subcommittee Chairman Davidson, Representative Barr (R-KY): What is the status of the CTA rulemaking, as you previously stated FinCEN intends to finalize it this year? Gacki: FinCEN will very soon finalize the interim final rule on CTA’s beneficial ownership information reporting regime. We are close to the finish line.
Representative Liccardo (D-CA): Based on a May GAO report finding that more than 99 percent of entities covered by the CTA have now been exempted through Treasury’s enforcement policy, how does Treasury justify that level of non-enforcement given Congress enacted the CTA to require beneficial ownership reporting? Gacki: U.S. companies are not required to report beneficial ownership. Treasury issued an interim final rule striking a different balance, and I do not remember the specifics of the GAO report. The CTA required Treasury to assess the burden on small businesses in implementing the law, and Treasury leadership decided that the typology of shell companies did not justify placing such a burden on millions of law-abiding businesses. Accordingly, Treasury used the authority granted under the CTA to authorize exemptions.
Representative Liccardo: Does Treasury’s decision not to enforce beneficial ownership reporting requirements for most U.S. companies make FinCEN’s job of protecting the financial system easier or harder, particularly given reports that U.S. companies, including World Liberty Financial, have engaged in significant transactions with individuals linked to BSA violations? Gacki: The U.S. continues to have the most robust, effective AML and illicit finance regime in the world. FinCEN has a number of different tools.