On May 21, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions held a hearing titled “Modernizing the BSA for Financial Crime in the 21st Century” to examine how Congress could update the BSA/AML framework for current financial-crime risks. The subcommittee framed the hearing as a review of the efficacy, challenges and costs of BSA/AML reporting, regulations and requirements — particularly in light of emerging technologies, the evolving illicit finance landscape, and FinCEN’s and banking regulators’ April proposals to overhaul the BSA/AML framework (previously covered by InfoBytes here). Discussion focused on whether existing suspicious activity report and currency transaction report requirements are too voluminous relative to the value they provide, whether thresholds should be modernized, and whether FinCEN and law enforcement should provide financial institutions with more feedback on how reported information is used.

Subcommittee members also examined how AI, digital identity tools, and other technology could help financial institutions better identify suspicious activity and support law enforcement, while raising privacy, oversight, and data-use concerns. The subcommittee also discussed the Small Business Relief Act of 2026, which would require Treasury to establish procedures allowing reporting companies to submit beneficial ownership information to FinCEN in connection with tax filings. The hearing further addressed broader illicit-finance issues, including digital-asset-related crime, fraud, transnational repression concerns, and whether beneficial ownership reporting can reduce compliance burdens while preserving information useful to law enforcement.