What is the Bank Secrecy Act and why is Congress reviewing it?

The Bank Secrecy Act (BSA) is a 1970 U.S. anti-money laundering law that requires banks and some crypto firms to report suspicious transactions and verify customer identities. Lawmakers are reviewing it because AI-powered scams, crypto transactions and cross-border digital payments are evolving faster than the current system was designed to handle.

Why are crypto companies pushing for BSA reform?

Crypto firms argue the current reporting system creates huge amounts of data but often fails to stop fast-moving financial crime. TRM Labs said illicit crypto funds can now move across wallets within 24 to 48 hours, making slower “after-the-fact” reporting less effective.

What did TRM Labs say about AI-enabled crypto crime?

TRM Labs told Congress that AI-driven scam activity surged 500% over the past year. The company also claimed North Korea stole more than $2 billion in crypto during 2025 and another $600 million in early 2026, showing how cybercrime groups are scaling operations faster with automation and AI tools.

What are “pig butchering” scams mentioned during the hearing?

Pig butchering scams are long-running online fraud schemes where victims are manipulated into fake investment opportunities, often involving crypto. Witnesses at the hearing said these scams extracted more than $35 billion from Americans last year.

What changes to the Bank Secrecy Act are banks and crypto firms proposing?

Proposals discussed in Congress included higher reporting thresholds, simplified suspicious activity filings, more risk-based oversight and official approval for AI-powered monitoring systems. Some witnesses also supported stronger information-sharing between crypto firms, banks and law enforcement agencies.

Did anyone argue for fully repealing parts of the Bank Secrecy Act?

Yes. Cato Institute researcher Nicholas Anthony argued the issue was not just inefficiency but financial surveillance itself. He suggested lawmakers consider options ranging from inflation-adjusted thresholds to repealing parts of the BSA framework entirely.

Why are banks interested in using AI for anti-money laundering compliance?

Banks and crypto companies believe AI tools can analyse suspicious transactions much faster than manual systems. Witnesses said machine learning could reduce compliance costs and help investigators detect illicit activity before funds move permanently across global networks.

How could BSA reform affect crypto exchanges and stablecoin issuers?

Potential reforms could change how exchanges monitor transactions, store customer data and report suspicious activity. Crypto firms may benefit from clearer rules and AI-driven compliance flexibility, but stricter oversight could also increase operational costs for smaller platforms.

Image for illustrative purposes only. Not a real photo.

Crypto and banks push BSA overhaul in Congress

Written by Liezl GambePublished May. 25 2026Last Updated May. 25 2026

Crypto executives, banking groups and policy experts urged Congress to modernise the 1970-era Bank Secrecy Act during a House subcommittee hearing focused on AI-driven financial crime and digital assets.

The House Financial Services Committee’s National Security, Illicit Finance, and International Financial Institutions Subcommittee examined whether existing anti-money laundering rules remain effective as crypto adoption, AI-enabled scams and cross-border digital transactions accelerate.

“The framework that helped us win yesterday will not be enough to win today,”

Said Ari Redbord, who warned lawmakers that AI-powered scams surged 500% over the past year while illicit crypto funds can now move across wallets within 24 to 48 hours.

TRM Labs told lawmakers North Korea stole more than $2 billion in digital assets during 2025 and another $600 million in early 2026, while pig butchering scams extracted over $35 billion from Americans last year.

Subcommittee Chairman Warren Davidson criticised the Bank Secrecy Act as a “bloated surveillance machine,” while Cato Institute researcher Nicholas Anthony argued lawmakers should consider options ranging from raising reporting thresholds to fully repealing parts of the framework.

Banking groups including the Bank Policy Institute instead backed targeted reforms including simplified reporting rules, higher transaction thresholds and explicit approval for artificial intelligence tools in transaction monitoring systems.

The hearing came days after Donald Trump signed an executive order expanding customer due diligence rules under the Bank Secrecy Act by increasing scrutiny around undocumented immigrants, ITIN usage, foreign consular IDs and off-the-books wages.