Banking and Finance Law Daily Wrap Up, BANK SECRECY ACT—FinCEN urged to modernize AML rules and prioritize high-risk financial crimes, (Jun 18, 2026)

By George M. Gullo, J.D.

House committee leaders contend the rule represents an opportunity to reorient compliance toward producing actionable law enforcement intelligence.

On June 9, 2026, House Financial Services Committee Chairman French Hill (R-Ark.) and Subcommittee Chairman on National Security, Illicit Finance, and International Financial Institutions, Warren Davidson (R-Ohio), transmitted a formal comment letter to Andrea Gacki, Director of the Financial Crimes Enforcement Network (FinCEN), regarding FinCEN’s notice of proposed rulemaking (NPRM) on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Programs (see Banking and Finance Law, Apr. 8, 2026).

Priorities. The letter sets forth four interconnected priorities:

• reforming Bank Secrecy Act (BSA) enforcement culture,

• modernizing outdated filing thresholds,

• streamlining Suspicious Activity Report (SAR) and Currency Transaction Report (CTR) requirements, and

• facilitating the adoption of artificial intelligence (AI) tools in financial crime compliance.

Taken together, the Chairmen contend that the NPRM represents a critical, and potentially transformative, opportunity to reorient BSA compliance toward producing actionable law enforcement intelligence rather than generating voluminous, low-utility filings.

BSA enforcement. The letter opens with a critique of the prevailing BSA enforcement paradigm. Chairmen Hill and Davidson argue that supervisory agencies have long prioritized procedural compliance over substantive AML/CFT outcomes—penalizing financial institutions for technical or low-value deficiencies that bear little relationship to actual financial crime risk. This enforcement posture, they contend, has had a predictable and harmful effect: compliance officers and resources have been redirected toward liability mitigation and defensive reporting rather than genuine risk identification.

Statutory framework. The Chairmen base this critique on the statutory framework established by the Anti-Money Laundering Act of 2020 (AMLA), which they describe as having mandated a fundamental shift away from the process-heavy enforcement model. In their view, the failure to implement AMLA’s directives has undermined the credibility of the United States’ AML/CFT regime. The letter calls on FinCEN to use the final rule as a vehicle for delivering on AMLA’s core principles to ensure that enforcement actions target genuine failures rather than technical shortcomings irrelevant to law enforcement objectives.

Filing thresholds. The letter further addresses the BSA’s “outdated filing thresholds.” Financial institutions are currently required to file a Currency Transaction Report for any cash transaction at or above $10,000—a threshold that has remained unchanged since the BSA’s enactment more than fifty years ago. The SAR threshold, typically set at $5,000 or more, was established in the 1990s and similarly has not been adjusted for inflation or updated to reflect the dramatically altered landscape of financial transactions.

Threshold reform. The letter presents empirical support for threshold reform. In 2025, financial institutions filed approximately 21.5 million CTRs with FinCEN. A 2024 Government Accountability Office (GAO) report found that only 5.4 percent of those CTRs were ever accessed by law enforcement, prompting the GAO to recommend that FinCEN raise the threshold—a recommendation FinCEN itself acknowledged and agreed with. Similarly, approximately 4.8 million SARs were filed in 2025, yet available data suggest that only four percent generated any law enforcement follow-up inquiry. These figures underscore a structural inefficiency at the core of the current reporting regime; i.e., the overwhelming majority of mandatory filings consume significant compliance resources while producing no discernible law enforcement value.

Pending legislation. In response, the letter notes that the Committee has advanced H.R. 1799, the Financial Reporting Threshold Modernization Act, sponsored by Representative Barry Loudermilk, which would increase both thresholds and index them for inflation going forward. The Chairmen also observe that AMLA itself required FinCEN to conduct a threshold assessment with a view toward raising the applicable amounts. Accordingly, they urge FinCEN to treat threshold modernization as a central element of the final rule rather than a deferred consideration.

Streamlining requirements. Beyond threshold adjustments, the letter advocates for a broader simplification of BSA filing requirements. The Chairmen highlight several specific opportunities: simplifying CTR content requirements consistent with GAO recommendations; providing more granular guidance to financial institutions about the categories of SARs that FinCEN does not need, thereby enabling institutions to design their AML/CFT programs with greater precision and efficiency; and formally incorporating FinCEN’s October 2025, Frequently Asked Questions on SAR requirements into the body of the final rule to give those clarifications binding regulatory status. Additionally, the letter calls for the SAR filing obligation to be calibrated more tightly to truly high-risk behavior, reducing expectations to file for classes of transactions that data indicate rarely generate law enforcement action.

AI and compliance. The letter’s final section addresses the role of artificial intelligence in modernizing AML/CFT compliance. Chairmen Hill and Davidson express the view that AI holds transformative potential for financial institutions’ capacity to identify risk and generate meaningful intelligence, but caution that regulatory impediments—including requirements for parallel manual processes and general regulatory skepticism toward AI-driven tools—have inhibited adoption and undermined the commercial rationale for deploying these technologies.

AI integration. The Chairmen welcome the NPRM’s stated goal of encouraging the adoption of new AML/CFT technologies consistent with AMLA’s intent, and urge FinCEN to go further in the final rule by fully empowering financial institutions to integrate AI throughout their AML/CFT programs. The letter frames this not merely as a matter of regulatory modernization but as an imperative: as bad actors—money launderers and fraudsters alike—increasingly leverage advanced digital financial tools, it is essential that compliance functions be equipped to respond in kind.

Conclusion. The Hill-Davidson letter reflects a legislative view that the current BSA compliance framework, which is estimated to impose approximately $59 billion in annual costs across the financial sector, has drifted far from its statutory purpose. The letter’s four pillars—enforcement reform, threshold modernization, filing streamlining, and AI enablement—are mutually reinforcing because each is directed at refocusing finite compliance resources on the activities most likely to generate actionable intelligence for law enforcement and least likely to produce the defensive, low-value reporting that currently dominates the system. The Chairmen close by expressing optimism about the NPRM’s foundational direction and committing to continued engagement with FinCEN as the final rule is developed.

LegislativeActivity: BankingOperations BankSecrecyAct CrimesOffenses FinTech