Crypto Leaders and Experts Urge Congress to Update Bank Secrecy Act

Executives from the cryptocurrency sector and financial experts recently urged Congress to update the Bank Secrecy Act (BSA) during a hearing with the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions. This discussion highlighted the inadequacies of the BSA, originally established in 1970, in addressing modern financial crimes, particularly those exacerbated by artificial intelligence and the rise of digital assets.

Ari Redbord, Global Head of Policy at TRM Labs, emphasized that the BSA is not equipped to handle the complexities of financial crimes amplified by AI. He noted alarming statistics, including North Korea's illicit acquisition of over $2 billion in digital assets in 2025 and the significant losses from scams like 'pig butchering,' which cost U.S. citizens more than $35 billion last year.

“As threat actors are moving at machine speed, the strategies that were effective in the past are no longer sufficient for today’s challenges,” Redbord stated.

The hearing took place amid a broader push for reforms that would prioritize actionable intelligence over the volume of reports generated under the current BSA framework. Chairman Warren Davidson criticized the BSA as a cumbersome system that produces millions of suspicious activity and currency transaction reports without yielding proportional results. He suggested that the act has become a "bulky surveillance system" that fails to protect Americans effectively.

Redbord proposed several reforms, including the establishment of financial intelligence units for stablecoins and a legal framework to allow exchanges to freeze suspicious funds while awaiting law enforcement action. He also raised concerns about data security, urging that institutions only retain essential information to mitigate risks.

While some witnesses, like Nicholas Anthony from the Cato Institute, argued for a complete repeal of the BSA, others, including Carole House from the Atlantic Council, cautioned against drastic reductions in the framework, emphasizing the need to balance compliance with national security interests.

The hearing coincided with President Trump’s recent executive order aimed at enhancing customer due diligence requirements under the BSA, particularly concerning non-citizen clients. This order seeks to tighten scrutiny related to tax identification numbers and foreign consular identification, reflecting the administration's focus on immigration enforcement risks in financial transactions.