Americans for Tax Reform supports the STREAMLINE Act (S.3017), introduced by Senators John Kennedy (R-La.) and Tim Scott (R-S.C.), to cut red tape from outdated reporting requirements for banks and credit unions that disrupt service to consumers and small businesses.
This legislation is not only welcome but essential, as America’s Anti-Money Laundering (AML) framework has become a costly, intrusive, and inefficient bureaucracy that fails both consumers and law enforcement alike.
Americans for Tax Reform urges all members of Congress to support theSTREAMLINE Act.
The Bank Secrecy Act (BSA) is the primary law establishing AML rules for banks to follow. The law mandates that banks file Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) for transactions exceeding certain value thresholds that could be indicative of criminal activity and money laundering.
The BSA effectively deputized banks into fighting crime through regulatory coercion. Banks face severe monetary penalties for failing to catch illicit transactions. The law leaves them responsible for identifying criminals who have successfully evaded law enforcement — which makes little sense. Unsurprisingly, this approach has failed to yield meaningful outcomes in reducing money laundering or illicit finance.
Evidence shows that BSA reports are overproduced, creating a deluge of data on benign customers who are not involved in money laundering or criminal activities. The Financial Crimes Enforcement Network (FinCEN) received over 4.6 million SARs in 2023, with less than 0.3% of these reports resulting in an active FBI or IRS investigation.
To date, there is no publicly available evidence demonstrating that these reports result in a commensurate volume of criminal prosecutions or deterrence of illicit finance. In fact, FinCEN has acknowledged in public documents that the quality and usefulness of SARs vary widely, with many filed solely to satisfy defensive compliance standards rather than to flag real criminal activity.
The incentive structure established by the BSA compels banks to err on the side of overreporting. Banks face steep fines and penalties for every instance of illicit finance that goes undiscovered. Because of this punitive setup, banks go to great lengths to ensure no potential liabilities exist. In some cases, this has led to the debanking of customer accounts when the bank deems the compliance costs associated with servicing the customer to outweigh the revenue they provide. This type of debanking can affect money transmitters sending remittances to high-risk regions, as well as charities and NGOs operating in unstable countries.
The administrative burden of BSA/AML compliance costs banks billions of dollars annually. These costs are likely to fall on ordinary consumers in the form of higher borrowing costs, reduced lending, and higher fees for conventional services such as checking accounts.
Worse, this regime captures data on ordinary Americans — including small business owners and customers simply withdrawing their own funds — sweeping them under the purview of government surveillance without probable cause or suspicion.
The threshold increases in the STREAMLINE Act are both conservative and sensible. Had the $10,000 threshold for CTRs kept pace with inflation, the revised threshold would be approximately $80,000.
BSA reform is not about reducing the tools available to law enforcement or giving criminals a free pass. It is the exact opposite. A modernized AML regime must allow FinCEN to focus its resources on actionable intelligence and high-value targets. Genuine criminal conduct will continue to be buried under an avalanche of low-value data absent meaningful reform. The existing regime encourages financial institutions to err on the side of overreporting to shield themselves from regulatory liability, at the cost of efficiency.
The BSA has gone untouched for too long, ossifying into a surveillance regime whose costs vastly outweigh its benefits. Reform is not just a prudent policy matter, it is necessary.
Congress should swiftly move to pass the STREAMLINE Act and usher in a more effective and business-friendly regime of financial oversight.
