Summary
- Ari Redbord from TRM Labs informed a House subcommittee that the Bank Secrecy Act (BSA) is fundamentally ill-equipped to address financial crimes amplified by AI.
- This hearing took place shortly after Trump enacted an executive order to enhance BSA customer due diligence, particularly for accounts related to undocumented immigrants.
- Participants expressed varied opinions, ranging from complete repeal to targeted reforms and modernization focused on improved information-sharing.
On Thursday, executives from the crypto sector, policy analysts, and national security professionals presented their views to a House subcommittee regarding necessary updates to anti-money laundering legislation in light of advancements in AI and the rise of digital assets.
The House Financial Services Committee's subcommittee on National Security, Illicit Finance, and International Financial Institutions convened a hearing aimed at revisiting the Bank Secrecy Act, established in 1970, which mandates that banks and financial entities report suspicious activities and significant transactions.
This hearing coincided with a push from crypto companies, banks, and civil rights organizations to shift the focus of the BSA towards actionable intelligence rather than sheer reporting volume, as the Trump administration extends its oversight to non-citizen clients.
Ari Redbord, the Global Head of Policy at TRM Labs, testified that North Korea had illicitly acquired over $2 billion in digital assets in 2025 and another $600 million in early 2026. He also noted that fraudulent schemes, such as pig butchering, resulted in over $35 billion being taken from U.S. citizens last year.
TRM's Global Head of Policy @ARedbord testified today before the House Financial Services Subcommittee on 𝐌𝐨𝐝𝐞𝐫𝐧𝐢𝐳𝐢𝐧𝐠 𝐭𝐡𝐞 𝐁𝐒𝐀 𝐟𝐨𝐫 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐂𝐫𝐢𝐦𝐞 𝐢𝐧 𝐭𝐡𝐞 𝟐𝟏𝐬𝐭 𝐂𝐞𝐧𝐭𝐮𝐫𝐲.
His message: As threat actors are moving at machine speed,… pic.twitter.com/93sw6zhld8
— TRM Labs (@trmlabs) May 21, 2026
Redbord cautioned that AI-driven scams have escalated by 500% in the past year, with illicit funds now being transferred between wallets within just 24 to 48 hours. This rapid movement significantly narrows the timeframe for responses, rendering "retrospective reporting frameworks incapable of timely intervention" because "the strategies that were effective in the past are no longer sufficient for today’s challenges."
Overview of the Bank Secrecy Act
The Bank Secrecy Act forms the foundation of U.S. anti-money laundering legislation, obligating banks and crypto businesses registered as money services to submit suspicious activity reports, currency transaction reports for transactions exceeding $10,000, and to confirm customer identities.
Chairman of the Subcommittee, Warren Davidson (R-OH), characterized the BSA as a "bulky surveillance system that demands endless reporting without yielding proportional outcomes," highlighting that institutions submit nearly 5 million SARs and 21 million CTRs each year.
Today I chaired the Financial Services Subcommittee on National Security & Illicit Finance. The hearing focused on modernizing the Bank Secrecy Act, which has governed AML reporting since 1970.
After 55 years, the BSA produces mountains of paperwork that invade Americans'… pic.twitter.com/7RaLKgXh16
— Rep. Warren Davidson (@Rep_Davidson) May 21, 2026
Redbord proposed formal acknowledgment for stablecoin financial intelligence units, such as the T3 Financial Crime Unit, a collaboration between Tether, TRON, and TRM that has frozen over $450 million in illicit USDT since September 2024, along with a "digital asset hold law" that would provide exchanges with legal protection to freeze suspicious funds while awaiting law enforcement evaluation.
He also mentioned that institutions should retain only the necessary information on individual customers to assess illicit risk, cautioning that every new database becomes a potential target for ransomware and state-sponsored hackers.
During the session, Nicholas Anthony from the Cato Institute stated that the issue with the BSA lies not in its inefficiency but rather in the surveillance itself, asserting that "the history of financial surveillance has involved continuously shifting goalposts" from tax enforcement to concerns about "fraud and immigration," suggesting solutions ranging from adjusting thresholds for inflation to completely repealing the BSA framework.
John Court, general counsel at the Bank Policy Institute, supported
Carole House, Senior Fellow at the Atlantic Council, countered against drastic reductions to the framework, emphasizing that easing compliance requirements should not compromise the security of Americans and U.S. national interests.
AI was a common point of agreement among most witnesses.
Davidson, Redbord, House, and Court all endorsed the expanded application of machine learning and AI in transaction monitoring. Redbord was particularly vocal, advising lawmakers that "AI investigative tools can condense weeks of manual analysis into mere minutes" and advocating for federal investment in AI-driven investigative tools for various agencies, including IRS-CI, FinCEN, OFAC, FBI, DEA, Secret Service, and HSI.
This hearing took place shortly after President Donald Trump signed an executive order aimed at strengthening customer due diligence and identification requirements under the BSA, while enhancing scrutiny of account ownership and the financial risks related to immigration enforcement.
The order instructs the Treasury to tighten BSA customer due diligence protocols and highlight risks linked to ITIN usage, off-the-books wages, and foreign consular identification, while also requesting the CFPB to consider potential deportation risks in lending decisions.