Nicholas Anthony
Congress has once again brought the Financial Crimes Enforcement Network (FinCEN) before it to answer fundamental questions. And once again, FinCEN is unable to justify the $59 billion surveillance regime that required banks and other financial institutions to report their customers to the government more than 27.5 million times last year (Table 1).
This issue certainly isn’t new. In 2022, FinCEN Acting Director Himamauli Das struggled to defend the surveillance regime. When Representative Jim Himes (D‑CT) asked how FinCEN measures success, Das said he could not provide any concrete data. Representative Patrick McHenry (R‑NC) went further, asking, “What percentage of the [Bank Secrecy Act] reports in FinCEN’s monthly database lead to convictions?” Again, Das said, “We do not have precise metrics.”
Representative David Kustoff (R‑TN) brought up the point again, asking, “If you were talking to any of my constituents, how would you describe the effectiveness or efficiency of FinCEN?” Again, Das did not have an answer. Instead, he said, “In terms of this hearing, it’s clear that we need to do a better job in terms of communicating how effective FinCEN’s work is.”
Congress held another hearing nearly two years later with the newly hired FinCEN Director Andrea Gacki. Again, Representative McHenry asked if FinCEN was collecting statistics on the effectiveness of this surveillance regime. When Gacki said the agency had started to collect data, McHenry responded, saying, “You’ve been collecting [reports for several decades], yet we don’t know how law enforcement uses them. … You should have data to back it up. The agency should be better. … This is about Americans’ protection, it is about Americans’ civil liberties, and it is a high obligation.”
It seems McHenry’s warning went unheard. At the latest hearing in this saga, Representative Zachary Nunn (R‑IA) asked Gacki how many of the 27.5 million reports filed under the Bank Secrecy Act last year resulted in an arrest. She initially avoided the question for a full sixty seconds before Representative Nunn interrupted to say, “Just give me a number.” Gacki said that she did not have the number.
This response is unacceptable. People have been asking for answers for years. Worse yet, Congress passed legislation in 2020 that specifically required these answers to be provided. Yet, the American people have been left in the dark.
Congress has been beyond patient with FinCEN. It’s time to move forward and reform the Bank Secrecy Act regime.
At the simplest level, Congress could update the thresholds for all of the reports required under the Bank Secrecy Act so that they are adjusted for inflation. For example, consider the adjustment for currency transaction reports (CTRs). Whether you base that adjustment on the reporting required under the Trading with the Enemy Act in 1945, the enactment of the Bank Secrecy Act in 1970, or the Treasury’s currency transaction report regulation in 1972, it’s clear that this reporting regime has gotten out of hand (Figure 1). What was once $10,000 is now equal to at least $77,000 today.
However, doing so is not a perfect solution. Adjusting the thresholds would lessen the harm, but it would not address the fundamental intrusion that the Bank Secrecy Act regime has created. To that end, another option is to consider the regime as two distinct parts: record keeping and reporting. With this framing in mind, Congress could maintain the recordkeeping component but repeal the reporting requirement. Doing so would mean the records are still stored at the bank, but law enforcement would need to get a warrant to obtain them.
Yet, even then, this may not be enough to address the other issues the Bank Secrecy Act has created. Issues like know-your-customer requirements, transnational repression, derisking, and debanking all tie back to this regime. To that end, another option is to repeal the entire regime. Let banks decide what information they need, who they do business with, and what risks they take on. And if law enforcement wants to pry into that information, they’ll need a warrant.
Whichever path Congress chooses, reform is long overdue. We are quickly approaching the 55th anniversary of the Bank Secrecy Act. It’s time to stop this ever-expanding surveillance regime and restore privacy protections that are in line with the Constitution.