Why It Matters
The Bank Secrecy Act, the backbone of America's anti-money laundering framework, was enacted in 1970. More than five decades later, the House Financial Services Committee is convening a BSA modernization hearing to examine whether a law built for a paper-based financial system can keep pace with cryptocurrency, instant payments, and increasingly sophisticated financial crime.
A recent Cato Institute analysis found that the current BSA framework generated 28.7 million reports while yielding only 275 cited investigations, raising pointed questions about whether the compliance burden on financial institutions is producing results proportional to its cost. At the same time, IRS Criminal Investigation reported in February that BSA filings were used in most of its financial crime investigations, a data point that cuts in the opposite direction.
The tension between those two findings is precisely what the committee, chaired by French Hill (R-AR), will have to navigate when it meets Tuesday, May 19.
The Regulatory Catalyst
The most direct trigger for the hearing appears to be a sweeping proposed rulemaking that FinCEN, the OCC, the FDIC, and the NCUA jointly issued in early April. Published in the Federal Register on April 10, the rule would fundamentally reform how financial institutions design and operate their anti-money laundering and countering the financing of terrorism programs, aligning BSA compliance requirements with the Anti-Money Laundering Act of 2020.
The 60-day public comment period closes around June 9, meaning the hearing lands squarely in the window when Congress can still shape how regulators finalize the rule. A FinCEN fact sheet accompanying the proposal noted it would, among other changes, clarify that banks may share information with FinCEN related to certain AML enforcement actions. Legal analysts at Morrison Foerster and Norton Rose Fulbright both flagged the proposal as among the most consequential changes to BSA compliance architecture in years.
The Policy Backdrop
In June 2025, Treasury Deputy Secretary Michael Faulkender laid out the administration's guiding principles for BSA reform at the 62nd semi-annual plenary of the Bank Secrecy Act Advisory Group. According to a Treasury press release, Faulkender characterized the effort as addressing "an urgent need to modernize the implementation of the AML/CFT regime in the United States so that it is effective, risk-based, and focused on the greatest threats to financial institutions and national security." He also framed the reform as a balancing act, describing the goal of "finding the optimal fulcrum for balancing the somewhat opposing forces of costs and benefits."
On the Senate side, Banking Committee Chairman Tim Scott and Sen. John Kennedy introduced the STREAMLINE Act, which would raise the outdated reporting thresholds for Currency Transaction Reports and Suspicious Activity Reports. Kennedy described the bill as cutting "red tape" so law enforcement can "focus on real criminals, not debanking hardworking Americans or drowning our financial institutions in burdensome paperwork." The American Bankers Association praised the legislation for addressing thresholds that have not been meaningfully updated in decades.
Legislation Before the Committee
Several bills relevant to the hearing have moved through Congress in recent years, and committee members are among their sponsors.
H.R. 1602, the Financial Privacy Act of 2025, would require Treasury to annually report to Congress on the number and types of BSA reports filed, the number retained by FinCEN, and the protocols governing agency access to that data. The bill is sponsored by Rep. Warren Davidson (R-OH) and co-sponsored by Rep. Jim Himes (D-CT), both committee members, and is currently at the floor consideration stage.
The COUNTER Act, originally passed by the House in the 116th Congress and sponsored by committee member Rep. Emanuel Cleaver (D-MO), would establish innovation labs within Treasury and federal financial regulators to encourage new approaches to BSA compliance, create civil liberties and privacy officers within FinCEN, and implement whistleblower incentives for enforcement actions.
Ranking Member Maxine Waters (D-CA) previously sponsored legislation requiring Treasury to deliver BSA reports to congressional committees within 30 days of request, a measure that passed the House in the 117th Congress and speaks to the committee's longstanding interest in oversight access to FinCEN data.
The Corporate Transparency Act, which passed the House in the 116th Congress, established beneficial ownership disclosure requirements for certain corporations and LLCs, requiring them to report to FinCEN. That framework has faced legal challenges and implementation turbulence, providing additional context for the committee's interest in examining how the broader BSA architecture is functioning.
The Bottom Line
The convergence of a major pending rulemaking, active Senate legislation, and a critical policy debate over whether the current SAR and CTR reporting regime is producing law enforcement value sets up Tuesday's session as more than a routine oversight exercise. The committee will be weighing whether anti-money laundering reform should focus on raising reporting thresholds to reduce burden, improving data-sharing to increase utility, or both.
The answers will matter to every bank, credit union, and money services business required to file BSA reports, and to the law enforcement agencies that depend on that data to pursue financial crime.
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