U.S. Financial Services Committee National Security Subcommittee holds oversight hearing on FinCEN operations and beneficial ownership reporting

The U.S. Financial Services Committee’s Subcommittee on National Security, Illicit Finance, and International Financial Institutions held an oversight hearing with Financial Crimes Enforcement Network (FinCEN) Director Andrea Gacki on FinCEN’s authorities and operations and the status of the beneficial ownership reporting regime. Gacki said FinCEN “modified” its approach to beneficial ownership implementation and, consistent with the U.S. Department of the Treasury’s March 2, 2025 suspension of enforcement of the Corporate Transparency Act against U.S. citizens and domestic companies, issued an interim final rule on March 21, 2025 removing the requirement for U.S. companies and U.S. persons to report beneficial ownership information to FinCEN. Members pressed for reforms to FinCEN’s broader anti-money laundering framework, with Subcommittee Chair Warren Davidson arguing the Bank Secrecy Act has become overly burdensome and ineffective, and Chair French Hill questioning whether the Corporate Transparency Act’s reporting model is the best approach. Hill also warned against creating a new, breachable database affecting an estimated 32 million small businesses and suggested leveraging existing Internal Revenue Service filings such as Form 1065 and related K-1s. Other members highlighted compliance and outreach risks for small businesses under FinCEN’s residential real estate transfers rule, raised concerns that FinCEN is overwhelmed with data that can dilute actionable intelligence, and pointed to low participation in information sharing under USA PATRIOT Act Section 314(b), with 3,626 banks registered out of approximately 9,148 banks and credit unions nationwide. Gacki described fraud as the most-reported type of suspicious activity, citing elevated cyber-enabled fraud and increases in reported fraud and cybercrime each year since at least 2013.