For two decades, I have collaborated with policymakers and law enforcement across North America and Europe to bolster financial safeguards. These measures aim to prevent terrorism, violent extremist groups, and criminal networks from infiltrating the U.S. banking system. I have advocated for strict sanctions and worked to close enforcement loopholes. It’s been crucial to explain who facilitates illegal finances and trades, regardless of how ordinary they might seem.
From the outset, banks have played a key role in this initiative. By implementing the “know your customers” protocol and complying with the Bank Secrecy Act of 1970, financial institutions share vital information that aids law enforcement in uncovering illicit activities like human trafficking, fentanyl distribution, and financing for terrorism.
While these frameworks have been fundamental in safeguarding the nation, some tools designed to combat criminal activity are now inadvertently targeting legitimate customers, which can unfairly push them out of the financial landscape.
Many Americans may not realize that cash transactions exceeding $10,000 trigger federal currency transaction reports. This threshold was established during the Lyndon Johnson administration and hasn’t been adjusted, despite significant inflation. In today’s financial climate, $10,000 might barely cover a used car. Nonetheless, banks must flag these transactions regardless of the context, resulting in millions of reports each year that often hold little value for law enforcement.
Suspicious activity reports introduce yet another layer of scrutiny. Last year, banks submitted over 4 million such reports, and former officials have acknowledged that this flood of documentation rarely enhances public safety. Instead, it can hinder investigators trying to distinguish genuinely suspicious activities from the ordinary. If they can’t separate the critical information from the chatter, that could be quite problematic.
At the same time, regulators push banks to apply broad risk labels across the board for businesses that handle large amounts of cash, serve international clients, or operate in marginalized sectors. This isn’t just a theoretical issue. Charities, international aid organizations, and many immigrant-owned businesses are now at risk of exclusion. They aren’t involved in terrorism or crime; they’re just ordinary citizens being pushed to the edges of the financial system by bureaucracy masquerading as vigilance.
Congress is starting to tackle this issue through the Modernization Act on Financial Institution Regulations. This law aims to enhance transparency and accountability regarding how guidance is issued and implemented. It’s a positive step, but it’s not sufficient on its own.
If policymakers truly want to prevent the unintentional disconnection of legitimate citizens from financial services, modernizing the anti-money laundering framework is vital. This modernization should produce actionable insights that genuinely assist investigators, allowing banks to replace check-the-box alerts with data analyses that reveal actual misconduct. Banks will maintain customer identities, monitor accounts, and report suspicious activities effectively as they arise.
These changes will clarify responsibilities and enhance the safety of our nation and its banking sector. Clear standards will enable institutions to maintain legitimate client relationships, allowing them to quickly share data with authorities when real threats surface.
The U.S. has historically led global efforts in financing counter-terrorism and establishing a financial backdrop hostile to illegal activities. Its leadership hinges on having a safe, reliable, and accessible financial system. When honest individuals are arbitrarily excluded without clear justification, and when financial access is treated as a privilege rather than a right, that leadership foundation begins to crumble.
I believe policymakers can prioritize both security and fairness. A revamped anti-money laundering regime can bolster both objectives. Regulators and agencies could then focus their resources on true threats, reducing the burden on law-abiding financial institutions and their clients.
Throughout my life, I’ve focused on enhancing safety by making the misuse of our financial system difficult. That mission remains urgent. However, the tools created decades ago don’t address the challenges we face today. Without reforms, the anti-money laundering framework will continue its fundamental role, struggling to differentiate between allies and adversaries.
Congress and the administration must take action now. The stakes are simply too high for inaction.
