During a congressional hearing today, House Republicans said onerous data collection requirements have redirected resources away from the Financial Crimes Enforcement Network’s core mission of fighting financial crimes, with Democrats alleging that the Trump administration has sought to undermine the federal government’s ability to enforce the law.
FinCEN Director Andrea Gacki appeared before the House Financial Services Subcommittee on National Security and Illicit Finance for an oversight hearing, where she provided a summary of the agency’s actions since President Trump took office. Subcommittee Chairman Warren Davidson (R-Ohio) said that while the Bank Secrecy Act was created with good intentions, over the years it has transformed into “a bloated surveillance machine, demanding endless reports from banks, businesses and individuals without delivering proportional results.”
“Today this framework is dangerously outdated and the BSA’s one-size-fits-all mandates are tying up lots of resources,” Davidson said.
Subcommittee Ranking Member Joyce Beatty (D-Ohio) accused the administration of engaging in “dangerous rollbacks in our illicit finance regulatory framework,” including reductions in the size and scope of the Consumer Protection Financial Bureau and in enforcement of the Corporate Transparency Act, which requires FinCEN to collect beneficial ownership information from businesses.
The administration is “exempting over 99% of the companies that Congress intended the law to cover,” Beatty said. “This stunning reversal eliminates a critical new tool for law enforcement to unmask anonymous shell companies, effectively making the United States the preferred haven for money laundering, traffickers and fraudsters.”
BOI changes
FinCEN in March issued an interim final rule removing the requirement for U.S. companies and persons to report BOI to the agency. Gacki said the agency is seeking to finalize the rule later this year.
“The current administration has taken a look at the [BOI] reporting structure and assessed that the burdens on small business fell too greatly and needed to be alleviated, and that is what FinCEN did through the interim final rule,” Gacki said.
“However, there are still instances where domestic shell companies can be leveraged for financial crime, and there I can point to other sources of information that can help law enforcement if the beneficial ownership information regime is not being used,” she added. “For example, FinCEN’s customer due diligence rule on financial institutions does require the collection of information at the point at which accounts are opened. And financial transactions and financial accounts are usually critical to all forms of shell companies in the United States.”
Gacki was also asked by committee members whether FinCEN plans to delete any BOI collected from companies that no longer need to comply with the reporting requirements. She said the agency intends to delete the data along with the finalization of the interim rule.
