eyewitness grade The business and banking industry tells lawmakers that efforts to fight payment and investment scams must be helped through a “whole government” approach, as well as Fine tuning of suspicious activity reports – Apart from Abolish the company transparency law.
Tuesday, (April 1), the House Financial Services Department's National Security, Illegal Finance and International Financial Institutions Committee held a entitled “Follow Money: Tools and Techniques to Fight Fraud“The cost of getting involved in fraud increases,,,,, And the way of advanced technologyis now Leverage by criminals and bank and each other.
but Most witnesses alleged that existing regulations are not in sync with new attack vectors,,,,, and impose burdens when smaller businesses seek compliance These regulations.
In his opening speech, the Federal Trade Commission estimated that U.S. consumers lost $5.7 billion in investment scams last year, Warren Davidson, chairman of the R-Ohio subcommittee.
“Criminals are increasingly looking for ways to bypass U.S. financial regulations to trick Americans into cheating on their lifesaving savings My own Illegal proceeds,” he said.
Pay attention to bank confidentiality law
Additionally, when displaying the scope of illegal activities, AARP Fraud Prevention Director Kathy Stokes In her testimony, it said Even the FTC underestimates the amount of stolen every year. In 2023, it was reported that more than $158 billion was stolen from fraud.
“These criminal businesses use a wide variety of tools to commit crimes, including all communication and payment methods, complex counterfeiting plans, anonymous Shell companies and human trafficking,” Stokes said.
and Jacqueline Burns Koven, head of blockchain data platform chain analysis, Pointing toward the rise Pig slaughter and other scam, But adding that there is no mechanism or obligation to share information, state, local and federal agencies each other Together with the private sector, crypto companies and financial institutions share scam information with institutions through reports at suspicious activity and transaction level.
Is BSA outdated?
Rep. Davidson said he had paid tribute to the Bank Secrecy Act. this There Must be right tool – Includes suspicious activity reports (SARS, related to transactions above $5,000) and currency Transaction Report (CTRS, transactions over $10,000) Used Fight against fraudsters.
“The reporting burden has been growing, and there is no significant increase,” Davidson said, noting that the figures have not been adjusted for inflation. “ Fincen [Financial Crimes Enforcement Network] It is estimated that an average of 12,600 SARS and 57,000 CTR were submitted. every day In fiscal year 2023.
“According to the December 2024 GAO report, law enforcement agencies visited only 5.4% of CTRs submitted to Fincen between 2014 and 2023,” he said, urging inspections (possibly higher) to adjust the threshold.
Jeff Brabant, Vice President of Federal Relations, National Federation of Independent Enterprises, Urge lawmakers to abolish The Company Transparency Act, he said, exposes smaller companies to data privacy threats when reporting beneficial ownership data to Fincen.
“The federal database will be violated, and This will be He told the subcommittee. That's why Congress and the Treasury must immediately and permanently delete records of millions of American small business owners who have submitted theirs [reports]. “These businesses (about 33 million) are submitting details that government agencies could access through government agencies without subpoenas or warrants, he said.
exist at the same time They tend to hire an accountant or attorney to assist in filing documents, which increases operating costs and regulatory burdens, while fraudsters try to get them to share information through phishing and other scams through phishing and other seemingly official communications or websites.
Strategic Approach
Darrin McLaughlin, Executive Vice President and Chief Anti-Money Laundering (AML) and Flagstar Bank Sanctions Officer,,,,, And say That 1 Three adults in the United States have experienced financial fraud over the past 12 months.
“Bad actors have used it cutting edge Technology, social media and Telecommunications saves for life targeting Americans,” he told the subcommittee.
“We need a strategic approach” which includes banking, government and Other stakeholders, he said, “regulatory reforms have made us focus on real threats.”
He said banks have embraced AML compliance and anti-fraud programs to detect abnormal ways of fund traffic. As for SARS, he said: “By Law enforcement usually receives reports too late. “He added: “The federal government has a database That's There has been an outbreak of information that should be shared with the private sector. ”
He said that despite the thousands of SARS submissions In fact Reflect illegal activities. “This will help banks see an analysis of these reports and other information that the government may have.”
He advocated the BSA's “meaningful reform” and created more Based on risk AML approach and simplified reporting that allows banks to pay attention Higher risk –Customers (especially $10,000 is no longer Extremely large The sum of money), where In his testimony “The BSA program rules should be modified to explicitly allow such resources to be redistributed from low-risk and high-risk customers and activities,” he said.
During the inquiry, Davidson asked McLaughlin that when the bank fought the fraudster, the effect worked, but it did not work. McLaughlin it, Before them can Transactions with institutions. There have also been advancements in the model and our approach to monitoring customer behavior. ”
Also, R-Okla. Rep. Frank Lucas asks about the burden on small businessesand Brabant For example, the task of reporting “substantive control” has been widely defined: “So if you are a restaurant manager and you do not have ownership, then you [still] Possibly substantial control. When you are a small business owner is 'What Do I have to invest in senior staff? Fincen does not real Defining this, you are worried about going to jail for 10 years because you may not have put down enough senior staff. ”
