Crypto executives, policy researchers, and national security experts testified before a House subcommittee on Thursday on how to modernize anti-money laundering laws for an era of AI and digital assets.
The hearing landed as crypto firms, banks, and civil liberties groups push to refocus the BSA on actionable intelligence over reporting volume, while the Trump administration broadens its reach over non-citizen customers.
What is the Bank Secrecy Act?Subcommittee Chairman Warren Davidson (R-OH) opened by calling the BSA a "bloated surveillance machine demanding endless reports without delivering proportional results," noting institutions file nearly 5 million SARs and 21 million CTRs annually.
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.
Also, he noted how institutions should hold "the least amount of information that they need on an individual customer in order to make a decision" about illicit risk, warning that every new database is "a honeypot" for ransomware groups and state hackers.
AI was a point of consensus among most witnesses.
Davidson, Redbord, Carole House, and Court all backed broader use of machine learning and AI in transaction monitoring. Redbord pushed hardest, telling lawmakers that "AI investigative tools can compress weeks of manual analysis into minutes" and calling for federal funding of AI-native investigative tools across IRS-CI, FinCEN, OFAC, FBI, DEA, Secret Service, and HSI.
The order directs Treasury to tighten BSA customer due diligence rules and flag risks tied to ITIN use, off-the-books wages, and foreign consular IDs, while also asking the CFPB to weigh potential deportation risks in lending decisions.
