TRM Labs’ Ari Redbord instructed a Home subcommittee that the Financial institution Secrecy Act is “structurally incapable” of conserving tempo with AI-enabled monetary crime.
The listening to got here two days after Trump signed an government order increasing BSA buyer due diligence guidelines to flag accounts tied to undocumented immigrants.
Witnesses have been cut up between full repeal, focused reform, and modernization with stronger information-sharing.
Crypto executives, coverage researchers, and nationwide safety consultants testified earlier than a Home subcommittee on Thursday on the best way to modernize anti-money laundering legal guidelines for an period of AI and digital belongings.
The Home Monetary Companies Committee’s Nationwide Safety, Illicit Finance, and Worldwide Monetary Establishments Subcommittee held a listening to on Modernizing the BSA for Monetary Crime within the twenty first Century, revisiting the Financial institution Secrecy Act, the 1970 legislation that requires banks and monetary establishments to report suspicious exercise and enormous transactions.
The listening to landed as crypto corporations, banks, and civil liberties teams push to refocus the BSA on actionable intelligence over reporting quantity, whereas the Trump administration broadens its attain over non-citizen clients.
TRM Labs World Head of Coverage Ari Redbord, testifying earlier than the Subcommittee, instructed lawmakers that North Korea stole over $2 billion in digital belongings in 2025 and one other $600 million in early 2026, whereas pig butchering networks stripped greater than $35 billion from Individuals final yr.
TRM’s World Head of Coverage @ARedbord testified at this time earlier than the Home Monetary Companies Subcommittee on 𝐌𝐨𝐝𝐞𝐫𝐧𝐢𝐳𝐢𝐧𝐠 𝐭𝐡𝐞 𝐁𝐒𝐀 𝐟𝐨𝐫 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐂𝐫𝐢𝐦𝐞 𝐢𝐧 𝐭𝐡𝐞 𝟐𝟏𝐬𝐭 𝐂𝐞𝐧𝐭𝐮𝐫𝐲.
Redbord warned that AI-enabled rip-off exercise surged 500% over the previous yr whereas illicit funds now transfer throughout wallets inside 24 to 48 hours, compressing response home windows to the purpose the place “retrospective reporting frameworks are structurally incapable of producing a response in time” as a result of “the framework that helped us win yesterday won’t be sufficient to win at this time.”
What’s the Financial institution Secrecy Act?
The Financial institution Secrecy Act is the spine of U.S. anti-money laundering legislation, requiring banks and crypto corporations registered as cash providers companies to file suspicious exercise stories, foreign money transaction stories for quantities over $10,000, and to confirm buyer identities.
Subcommittee Chairman Warren Davidson (R-OH) opened by calling the BSA a “bloated surveillance machine demanding limitless stories with out delivering proportional outcomes,” noting establishments file almost 5 million SARs and 21 million CTRs yearly.
Right this moment I chaired the Monetary Companies Subcommittee on Nationwide Safety & Illicit Finance. The listening to centered on modernizing the Financial institution Secrecy Act, which has ruled AML reporting since 1970.
After 55 years, the BSA produces mountains of paperwork that invade Individuals’… pic.twitter.com/7RaLKgXh16
Redbord pitched formal recognition for stablecoin monetary intelligence items like T3 FCU, a Tether–TRON–TRM collaboration that has frozen over $450 million in illicit USDT since September 2024, and a “digital asset maintain legislation” giving exchanges a statutory protected harbor to freeze suspect funds pending legislation enforcement evaluate.
Additionally, he famous how establishments ought to maintain “the least quantity of data that they want on a person buyer so as to decide” about illicit threat, warning that each new database is “a honeypot” for ransomware teams and state hackers.
Through the listening to, Cato Institute researcher Nicholas Anthony mentioned the issue with BSA was not inefficiency however surveillance itself, saying “the historical past of monetary surveillance has been a historical past of ever-moving goalposts” from tax enforcement to “fraud and immigration,” whereas laying out choices starting from inflation-adjusting thresholds to repealing the BSA regime totally.
John Court docket, common counsel on the Financial institution Coverage Institute, backed reform relatively than repeal, calling Treasury’s proposed AML rule “an unlimited enchancment” and urging greater reporting thresholds, less complicated filings, risk-based oversight, and express approval for banks to make use of AI in transaction monitoring.
Atlantic Council Senior Fellow Carole Home pushed again on deep cuts to the framework, noting that lowering compliance burden mustn’t come at the price of “opening the door to adversaries in search of to hurt Individuals and U.S. nationwide safety pursuits.”
AI was some extent of consensus amongst most witnesses.
Davidson, Redbord, Carole Home, and Court docket all backed broader use of machine studying and AI in transaction monitoring. Redbord pushed hardest, telling lawmakers that “AI investigative instruments can compress weeks of guide evaluation into minutes” and calling for federal funding of AI-native investigative instruments throughout IRS-CI, FinCEN, OFAC, FBI, DEA, Secret Service, and HSI.
The listening to arrived solely days after President Donald Trump signed an government order directing regulators to strengthen buyer due diligence and buyer identification necessities beneath the BSA whereas increasing scrutiny round account possession and monetary dangers related to immigration enforcement.
The order directs Treasury to tighten BSA buyer due diligence guidelines and flag dangers tied to ITIN use, off-the-books wages, and international consular IDs, whereas additionally asking the CFPB to weigh potential deportation dangers in lending selections.
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