House conservatives’ probe into the “weaponization” of the government is triggering a rethink of banking system safeguards on the right. An investigation into federal law enforcement’s interactions with banks following the Jan. 6, 2021, attack on the Capitol is raising privacy concerns among Republicans over federal anti-money laundering rules. Rep. Jim Jordan, an Ohio lawmaker closely aligned with former President Donald Trump, is leading the effort. Those concerns could move to the forefront if the Republicans take power in 2025. It’s an issue to watch as Trump, who has defended the Jan. 6 rioters as “hostages,” stages a comeback and populist Republicans seek greater influence over policymaking. The focus is the 54-year-old Bank Secrecy Act, which requires financial institutions to flag to the government any customer activity that they deem suspicious. After Jan. 6, the Treasury Department’s Financial Crimes Enforcement Network, which enforces anti-money laundering rules, offered financial institutions potential methods for identifying suspicious transactions, according to documents released by House Judiciary. They included using search terms that have drawn the ire of GOP lawmakers, such as “Trump”, “Biden” and “Kamala.” In a February letter responding to concerns that Sen. Tim Scott (R-S.C.) raised about the issue, a Treasury official wrote that the Jan. 6 communications came as part of a voluntary “FinCEN Exchange” convened following the Capitol attack. “As part of these Exchange events, which began shortly after January 6 under the prior Administration, FinCEN and banks shared information about methodologies that banks could consider using as part of their AML/CFT programs to identify indicia of suspicious activity,” the official, Corey Tellez, wrote. The exchanges focused on Jan. 6 ended in February 2021, according to the letter, which was obtained by MM. The investigation has caused headaches for the banking industry. Bank of America and Citigroup have both received subpoenas from the committee. Some Republicans are calling for changes to the BSA that would require FinCEN and other law enforcement entities to obtain warrants to access customers’ financial data. “The government is essentially warrantlessly surveilling the American people,” said Rep. John Rose (R-Tenn.), who has introduced legislation that would repeal the section of the BSA that requires financial institutions to turn over suspicious financial information without a warrant. “I think if the American people knew the extent to which their private information was being shared already, they would be horrified.” Rose’s legislation, first introduced in 2022, has gotten little traction in the House Financial Services Committee, which has jurisdiction over banking regulations. But Jan. 6 has “brought a lot of attention to a problem that was really hard to get attention to,” said Norbert Michel, vice president of the Cato Institute’s Center for Monetary and Financial Alternatives. Treasury says suspicious activity reporting is key to its anti-money laundering efforts. In the February letter to Scott, the FinCEN official wrote that suspicious activity reports “constitute critical tip-and-lead information that helps law enforcement identify, stop, and apprehend criminal actors.” It’s an issue that could spark tension between hard-right lawmakers concerned about privacy and traditional GOP law enforcement hawks wary of stripping away authority used to stop money laundering. “If you roll back the BSA, it would be an open invitation for all these criminal groups to come here and launder money,” said Daniel Stipano, a former longtime banking regulator at the Office of the Comptroller of the Currency who is now a partner at the law firm Davis Polk. Happy Thursday — Send tips to zwarmbrodt@politico.com.
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