U.S. House Financial Services Committee subcommittee holds hearing on FinCEN operations and anti money laundering reporting reform

The U.S. House Financial Services Committee’s Subcommittee on National Security, Illicit Finance, and International Financial Institutions is holding a hearing with FinCEN Director Andrea Gacki to review FinCEN’s operations, the Beneficial Ownership Information reporting regime, the Anti Money Laundering Act of 2020 and the broader Bank Secrecy Act framework. In prepared opening remarks, Subcommittee Chairman Warren Davidson framed the hearing around whether current anti money laundering and beneficial ownership reporting requirements are overly burdensome and ineffective. Davidson argued that the existing Bank Secrecy Act regime generates large reporting volumes at high compliance cost with limited law enforcement value, citing nearly 5 million suspicious activity reports and more than 21 million currency transaction reports filed each year, a Government Accountability Office finding that 5.4 percent of currency transaction reports are reviewed by law enforcement, an estimate that only 1 percent of laundered proceeds are intercepted, and reported annual compliance costs of USD 52 billion. He welcomed FinCEN’s April anti money laundering program notice of proposed rulemaking as a step toward a more risk-based approach, while saying it did not address currency transaction report or suspicious activity report thresholds. He also criticized the prior implementation of the Corporate Transparency Act’s beneficial ownership reporting requirements, referred to committee action advancing his Repealing Big Brother Overreach Act, and raised concerns that FinCEN’s Residential Real Estate Rule would further expand reporting burdens. The hearing is the fourth with the FinCEN director under Section 5336(c)(11) of the Corporate Transparency Act. Davidson said lawmakers are working on legislation and are looking for FinCEN to finalize its rule changes.