Today, the Subcommittee on National Security, Illicit Finance, and International Financial Institutions, under the leadership of Subcommittee Chair Warren Davidson (OH-08), convened to discuss the authorities and operations of the Financial Crimes Enforcement Network (FinCEN). The session featured FinCEN Director Andrea Gacki as a key witness as lawmakers addressed the current state of the bureau’s beneficial ownership reporting regime.
Chair Davidson opened the discussion by emphasizing the urgent need to reform FinCEN’s operations, criticizing the outdated and cumbersome nature of the Bank Secrecy Act (BSA). He referred to the BSA’s initial intent in 1970 to enhance financial transparency against organized crime as having morphed into a “bloated surveillance machine” that burdens both banks and businesses.
“Today, it’s dangerously outdated,” Davidson stated. “The BSA’s one-size-fits-all mandate wastes resources and erodes freedoms, often stifling innovation. Recent legislation such as the Corporate Transparency Act and the Anti-Money Laundering Act of 2020 has proven to be ineffective and overly cumbersome.”
Further discussing the Corporate Transparency Act, Chairman French Hill (AR-02) highlighted the compliance requirements for companies, which mandate the reporting of four key details: full legal name, date of birth, current address, and a unique identifier. “While much of this information is accessible, I believe there’s a better way to approach this,” he commented, suggesting alternatives to mitigate the burden on small businesses.
Hill specifically pointed out the implications of creating an extensive new database which he argued could lead to breaches and security threats. Instead, he proposed the utilization of existing financial forms like Form 1065, which pass-through entities currently have to file, along with their resultant K-1s.
Concerns were raised by Rep. Roger Williams (TX-25) regarding the potential impact of FinCEN’s latest regulatory developments, particularly the residential real estate transfers rule. He expressed worry that many small businesses, including title companies, were still unaware of existing requirements, indicating a need for better education and support from FinCEN to prevent unfair penalties.
Rep. Frank Lucas (OK-03) also contributed to the dialogue by raising concerns about the volume of data FinCEN deals with, suggesting that the overwhelming amount of material could dilute important information that is crucial for combating financial fraud.
In discussion of Section 314(b) of the USA PATRIOT Act, Rep. Andy Barr (KY-06) called attention to the limited engagement of financial institutions in sharing information about money laundering or terrorism, noting that only 3,626 out of approximately 9,148 banks and credit unions are registered to participate in such information-sharing.
In addressing FinCEN’s priorities, Director Andrea M. Gacki outlined the agency’s focus on a broad spectrum of financial fraud, which remains the most commonly reported type of suspicious activity. She noted that cyber-enabled fraud has been on the rise, with reported fraud and cybercrime incidents increasing annually since at least 2013.
Gacki referenced various forms of fraud, including elder financial exploitation, government benefits fraud, digital asset investment scams, and account takeover attacks, stating that sophisticated criminal networks have stolen significant amounts from Americans without the need for physical presence in the country.
In a move to ease the regulatory burden on U.S. companies and individuals, Gacki stated that FinCEN has modified its approach to implementing beneficial ownership requirements. This initiative aligns with the March 2, 2025 announcement from the U.S. Department of the Treasury, which suspended enforcement of the Corporate Transparency Act against U.S. citizens and domestic companies.
FinCEN’s issuance of an interim final rule on March 21, 2025, reflects this shift, removing the obligation for U.S. companies and citizens to report beneficial ownership information to the bureau. Such changes signal an effort to balance regulatory compliance with the need for protecting small businesses and fostering a more innovative financial environment.
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