Following the Money: Tools and Techniques to Combat Fraud

Defense Posture and Global ThreatsHouse Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions · 2025-04-01 · 119th Congress
The House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions convened this hearing to examine tools and techniques for combating financial fraud, including suspicious activity reports (SARs), currency transaction reports (CTRs), the Corporate Transparency Act's beneficial ownership rules, and blockchain analytics. Begins at 0:19:46
Transcript
Highlights

Title

Combating investment fraud, scams, and financial crime reporting reform

Purpose

The House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions convened this hearing to examine tools and techniques for combating financial fraud, including suspicious activity reports (SARs), currency transaction reports (CTRs), the Corporate Transparency Act's beneficial ownership rules, and blockchain analytics. Witnesses from a bank, a small-business trade association, a blockchain analytics firm, and AARP testified about the scale of fraud losses, the burdens of current reporting regimes, and gaps in public-private information sharing. Begins at0:19:46

Who spoke

Chairman Warren Davidson (R-OH)0:19:46: Opened by citing FTC data that consumers lost $5.7 billion to investment scams in 20240:20:16, noted SAR/CTR thresholds (filed at $5,000/$10,000) have never been adjusted for inflation since 19700:22:47, and said law enforcement accessed only 5.4% of CTRs filed 2014–20230:23:18; later questioned witnesses on public-private data sharing0:52:08.

Ranking Member Maxine Waters (D-CA)0:29:23: Cited nearly $13 billion in 2023 fraud losses, especially harming Americans over 500:29:53; later pressed Kathy Stokes on Trump's meme coin, saying it earned nearly $100 million in fees while traders lost $2 billion1:08:16, and asked how criminals use crypto to target older Americans1:09:47.

Rep. Ranking Member (subcommittee) Ms. Batty (D)0:24:49: Criticized the administration's rollback of CFPB enforcement, non-enforcement of the FCPA, and Treasury's exemption of over 99% of companies from Corporate Transparency Act reporting0:26:50; cited a $10 million tech-support scam using shell companies0:27:51.

Darrin McLaughlin, Flagstar Bank (EVP, Chief BSA/AML & Sanctions Officer)0:30:54: Testified 1 in 3 adults experienced fraud in the past year0:31:54; called for a risk-based BSA approach, better government-to-bank feedback, and reform of outdated reporting thresholds0:34:56; said community banks face heavier relative SAR-filing burdens than large institutions1:38:35.

Jacqueline Burns Koven, Chainalysis0:36:27: Said scam operators received over $10 billion in crypto payments annually for four straight years, with 2024 a record0:37:28; identified the Huione Guarantee marketplace as processing over $70 billion and serving as a "one-stop shop" for scam supply chains0:37:58; said stablecoins made up 63% of tracked illicit transactions per Chainalysis's 2025 report1:41:37.

Jeff Brabant, NFIB0:41:30: Said Corporate Transparency Act filings require driver's license copies from beneficial owners of businesses with under 20 employees and $5 million revenue0:42:00; described a scam BOI-filing site, boir.org, that charged an Indiana farmer $249 for an incomplete filing0:43:01; detailed IP theft of Illinois-based Power Planter's products by Chinese sellers0:45:03.

Kathy Stokes, AARP Director of Fraud Prevention Programs0:46:34: Said AARP's fraud helpline receives 500 calls daily0:47:35; cited FTC data suggesting actual 2023 fraud losses may exceed the reported $10.4 billion due to underreporting0:48:06 (later cited $158.3 billion for 20231:52:15); said "we cannot educate our way out of this" and pointed to the new National Elder Fraud Coordination Center2:00:20.

Rep. Frank Lucas (R-OK)1:02:44: Asked how reporting burdens affect community bankers' ability to focus resources on catching fraud1:03:14.

Rep. Maxine Waters — see above.

Rep. Pete Sessions (R-TX)1:13:19: Pressed witnesses on which federal agency leads fraud enforcement coordination and whether reporting streamlining exists1:14:19.

Rep. Juan Vargas (D-CA)1:18:22: Noted a Trump-appointed judge called an administration executive order "blatantly unconstitutional"1:19:23; pressed Brabant on the tension between wanting government data shared and warning that database is a hacking target1:20:24; criticized CFPB call-line being unanswered1:22:56.

Rep. Roger Williams (R-TX)1:23:26: Asked Koven about cartels and crypto laundering evasion1:24:27 and Brabant about BOI-related phishing scams1:26:28.

Rep. Bill Foster (D-IL)1:28:29: Raised digital identity verification and AI personal assistants as potential fraud-prevention tools for seniors1:30:30; asked what fraction of the Bybit $1.5 billion hack has been recovered, learning only about $40 million to date1:33:31.

Rep. Young Kim (R-CA)1:34:01: Asked Koven to detail Huione Guarantee's role in cyber scams1:34:31 and about sanctions effectiveness against it1:36:34.

Rep. Sean Casten (D-IL)1:39:36: Asked McLaughlin whether stablecoin issuers should face the same BSA/AML rules as banks1:40:06; pressed Koven on the 63% stablecoin illicit-transaction figure and offchain laundering risks1:42:07.

Rep. Andy Ogles (R-TN)1:44:38: Asked Koven about Huione's accessibility on Apple/Google platforms1:45:09 and about combating child trafficking financing1:47:11.

Rep. Robert Garcia (D-CA)1:49:43: Identified as a former federal prosecutor and DA; questioned Stokes and Brabant on whether basic beneficial-ownership information (name, DOB, address, ID number) is necessary for investigating criminal shell companies1:51:15.

Rep. Maria Elvira Salazar (R-FL)1:55:47: Noted Miami ranks #1 in the nation for reported fraud, costing Floridians over $850 million1:55:47; asked McLaughlin and Koven why Miami is targeted1:56:17; pressed Stokes on why education alone hasn't reduced elder fraud losses2:00:50.

Rep. Lisa McClain (R-MI)2:01:21: Asked Koven how blockchain analytics could speed up SAR/CTR filing and analysis2:01:51, and McLaughlin how FinCEN could improve feedback to banks2:04:23.

Rep. Zach Nunn (R-IA)2:06:54: Introduced the bipartisan GUARD Act to give state/local law enforcement blockchain-fraud-fighting tools2:07:25; cited a 68-year-old Iowa veteran who lost over $100,000 to a scam2:07:25; asked Koven and Stokes about training local law enforcement2:08:25.

Key moments

Davidson noted $10,000 in 1970 (the CTR threshold) would be over $81,000 today, yet the threshold has never been adjusted for inflation0:22:47.

GAO found law enforcement accessed only 5.4% of CTRs filed between 2014 and 20230:23:18.

Waters said Trump's meme coin generated nearly $100 million in trading fees in under two weeks while small traders lost $2 billion, and separately that Trump is launching a stablecoin company while negotiating stablecoin legislation1:08:161:09:17.

Brabant said a Google search for CTA beneficial-ownership filing surfaces scam sites like boir.org, which used an imitation government seal and charged an Indiana farmer $249 for an incomplete filing he likely can't get refunded0:43:31.

Koven said Huione Guarantee has processed more than $70 billion in crypto transactions since 2021 and functions as a "one-stop shop" for the scam supply chain, including selling victim contact data0:37:581:35:02.

Casten got McLaughlin to agree stablecoin issuers should face the same BSA/AML rules as banks, warning that exempting them would make bad actors "more aggressive"; Koven confirmed stablecoins made up 63% of tracked illicit crypto transactions in Chainalysis's 2025 report1:40:061:41:37.

Vargas confronted Brabant and McLaughlin over an apparent contradiction: industry wants more government data shared while also warning that a 32-million-record BOI database would be "a hacker's dream"1:20:241:20:54.

Stokes said AARP's fraud helpline gets 500 calls daily and that total 2023 U.S. fraud losses reached an estimated $158.3 billion — three times Coca-Cola's revenue — concluding "we cannot educate our way out of this"1:52:152:00:50.

Foster revealed only about $40 million of the $1.5 billion Bybit North Korea hack has been recovered to date1:33:31.

Salazar highlighted Miami as the #1 U.S. metro for reported fraud, costing Floridians over $850 million, with witnesses attributing it to a large vulnerable senior population and easy overseas access1:55:471:57:18.

Metadata

CommitteeHouse Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions
Chamber / CongressHouse · 119th Congress
Date2025-04-01
TypeHearing
Witnesses
Mr. Darrin McLaughlin — Executive Vice President – Chief BSA/AML & Sanctions Officer, Flagstar Bank
Mr. Jeff Brabant — Vice President, Federal Government Relations, National Federation of Independent Business (NFIB)
Ms. Jacqueline Burns Koven — Head of Cyber Threat Intelligence, Chainalysis
Ms. Kathy Stokes — Director, Fraud Prevention Programs
Videoyoutube
Transcript225 caption blocks · 17,987 words · 2:15:22 runtime
EventCongress.gov 118056