The Bank Secrecy Act was signed into law in 1970. Richard Nixon was president, the internet didn’t exist, and the fastest way to launder money was a suitcase full of cash on a plane.

Ari Redbord, Global Head of Policy at TRM Labs, testified before the House Financial Services Subcommittee on May 21, laying out a blunt case: the BSA’s reporting frameworks were built for a world where suspicious transactions took weeks to trace, not one where illicit funds hop across blockchain networks in 24 to 48 hours.

The numbers behind the warning

Redbord brought data from TRM Labs’ 2026 Crypto Crime Report. North Korean hackers stole over $2 billion in digital assets during 2025, with an additional $600 million taken in just the early months of 2026.

So-called “pig butchering” schemes, a category of long-con investment fraud where victims are groomed over weeks before being drained of their savings, cost American victims more than $35 billion last year. AI-enabled scam activity surged by 500% over the same period.

When criminals can move stolen crypto across multiple blockchains in under two days, a regulatory framework that relies on banks filing Suspicious Activity Reports, which can take 30 days or more to process, is structurally incapable of keeping pace. Redbord made this point explicitly, arguing that the current system’s response times are fundamentally mismatched with the speed of modern illicit finance.

What TRM Labs is asking for

Redbord called on Congress to equip agencies like FinCEN and the FBI with what he described as “AI-native investigative tools,” essentially real-time blockchain analytics and machine learning systems that can match the velocity of the crimes they’re trying to stop.

The hearing featured a broader consensus among stakeholders, including representatives from the Bank Policy Institute and the Atlantic Council, that the BSA needs a technology-driven overhaul. No specific tokens, protocols, or platforms were singled out. The focus was squarely on the overarching regulatory architecture and whether it can handle the convergence of AI and digital assets in criminal hands.

What this means for crypto investors

If lawmakers act on the themes from this hearing, crypto exchanges and digital asset platforms could face significantly heightened compliance requirements, including faster reporting obligations and new standards for how platforms monitor and flag suspicious activity in real time.

The $35 billion pig butchering figure adds consumer protection pressure to the mix, potentially pulling the SEC, CFTC, and state regulators deeper into the enforcement conversation.

Companies already building AI-enhanced compliance and security tools, firms like TRM Labs, Chainalysis, and Elliptic, stand to benefit from a regulatory push toward real-time, technology-driven AML systems. The 500% surge in AI-enabled scam activity signals that the attack surface is growing faster than defenses are being deployed.