Should the Treasury Dept. Study Technologies Like AI & Blockchain to Stop Financial Crimes? (H.R. 2613)

What is H.R. 2613?

(Updated October 22, 2019)

This bill — the Advancing Innovation to Assist Law Enforcement Act — would require the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) to study the implementation of artificial intelligence, digital identity technologies, blockchain, and other innovative and emerging technologies to improve the agency’s ability to identify and stop criminal activity and bad actors. This would entail looking at how such technologies: are currently being implemented and used at FinCEN; could be leveraged to make FinCEN’s data analysis more efficient and effective; and could be used by FinCEN to more actively analyze and disseminate the information it collects and stores to give federal, state, tribal, and local law enforcement and other federal agencies leads in investigations.

The report required in this bill would be issued no later than six months after this bill’s passage. It would be issued to the Senate Committee on Banking, Housing, and Urban Affairs and the House Financial Services Committee. In addition to the technological findings described above, it would also include information on whether any of the technologies assessed could help combat money laundering and other forms of illicit finance and policy recommendations, if applicable, on facilitating and improving communication and coordination between the private sector, FinCEN, and federal agencies in order to meet their anti-money laundering (AML) compliance obligations. 

Argument in favor

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) could be much more efficient and effective at its work were it to integrate emerging technologies such as AI, digital identity technologies, and blockchain. However, before it can do that, both the agency itself and policymakers need to understand what technologies are available and how they can be applied. The report this bill requires would fulfill that need.

Argument opposed

Since the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) is already investigating technologies to prevent financial crimes and improve anti-money laundering (AML) compliance through its Innovation Hours Program, this legislation isn’t needed. Instead of requiring a report from FinCEN, lawmakers who want to better under the technology FinCEN is evaluating can simply join these sessions to learn about new FinTech and RegTech.

Impact

Financial services industry; financial services fraud; financial crimes; detection and prevention of financial crimes; technology to detect and prevent financial crimes; FinCEN; Senate Committee on Banking, Housing, and Urban Affairs; and House Financial Services Committee.

Cost of H.R. 2613

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Rep. Anthony Gonzalez (R-OH) introduced this bill to revolutionize the way law enforcement works to find and stop criminal activity in the financial services industry, including potential terrorist threats, through the use of artificial intelligence (AI), blockchain, and other emerging technologies. After this bill passed the House Financial Services Committee by a unanimous vote, Rep. Gonzalez said: 

“America is the frontrunner in innovation. Our government should be leveraging our new technologies to keep our nation safe and stop crime, especially where our financial services industry and law enforcement can work as a team. I am pleased to see my language for this included in a larger bill that will provide law enforcement and financial institutions more tools to combat illicit activities. I look forward to continuing to work in a bipartisan manner with my colleagues on both sides of the aisle to move the ball forward and support our law enforcement.”

In May 2019, FinCEN launched an Innovation Hours Program to provide dedicated time on a monthly basis to meet with financial institutions, regulatory and financial technology firms, and others so they can share information with the agency on innovative approaches to evaluating, maintaining and reporting information under the Bank Secrecy Act in order to further strengthen the financial system against illicit financial activity. This program is part of a broader FinCEN Innovation Initiative detailed in the the Joint FinCEN-Federal Banking Agency Statement on Innovation (issued on December 3, 2018 to detail the outputs of a working group established by the Treasury Dept.’s office of Terrorism and Financial Intelligence, federal depository institution regulators, FinCEN, and FinCEN’s regulatory partners). 

Under the Innovation Hours Program, FinCEN meets with innovation-focused institutions, technology companies, payments processors, regulators and others in order to: 1) discuss or demonstrate innovative financial products and services and compliance solutions; 2) educate policymakers and regulators about new and emerging financial technology (FinTech) and regulatory technology (RegTech) business models and operating environments. 

This legislation unanimously passed the House Financial Services Committee with the support of two bipartisan cosponsors (one from each party).

Of Note: In a joint report, management and technology consulting firm Booz Allen Hamilton and the Data Foundation observed that the federal government is already working to deploy blockchain across a number of agencies (FinCEN is not one of those agencies). However, they believe deeper consideration of how blockchain might enable better recognition of data as a strategic asset for government is needed. They also argue that blockchain could help “bring a wider circle of participants into a project that produces open data for public use.”

Media:

• Booz Allen Hamilton and the Data Foundation Report (Context)
  
• Joint FinCEN-Federal Banking Agency Statement on Innovation (Context)
  
• Federal Register (Context)