Lisa McClain Asks Witness If Blockchain Technology Can ‘Streamline’ The Process To Catch Fraud

4/8/2025

During a House Financial Services Committee hearing last week about combatting fraud, Rep. Lisa McClain (R-MI) questioned Jacqueline Burns Koven, the Head of Cyber Threat Intelligence at Chainalysis, about using blockchain technology to file reports detailing suspicious activity and currency transactions.

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Transcript

00:00Thank you, and thank you all for being here.

00:02This is a really important topic, I think, and something that I think we really need to figure out how to get our arms around.

00:09So, again, appreciate for you holding the hearing as well as talking about this.

00:14I want to start with Ms. Coven.

00:17And I'm trying to understand blockchain, the role it plays,

00:21but could blockchain analytics or other technological solutions, so to speak, streamline the filing and analysis of SARs and CTRs?

00:35And if the answer is yes, which I hope it is, could you expand on that a little bit?

00:40Yes, thank you for the question.

00:42Blockchain analytics already is enriching SAR and CTR quality.

00:46Our customers from the private sector are leveraging the insights from our data to file their SARs and CTRs today.

00:55It paints a very vivid picture of the entire kill chain of events.

01:00So if we're talking about scams in particular, you have a much vivid color of where the funds are going and coming from,

01:07counterparties as well, much more so than you would in the traditional financial industry.

01:12And is the timing a lot quicker as well?

01:15I'm assuming?

01:17Yes, ma'am.

01:17That's correct.

01:19Cryptocurrency is an attractive asset for legitimate uses as well as illicit for its speed.

01:24I mean, in my opinion, we have all these government or agencies, and we have these rules and regulations,

01:29and at times they're so cumbersome and at times overburdening for the businesses,

01:34where I think the businesses are trying to do the right thing and people are trying to do the right thing.

01:39It's just the volume is so immense, right, that it just takes time to go through that.

01:48So one of the biggest advantages I see, and I'd like to get your opinion on this, is the time,

01:53because to your point, the timing is crucial on when we find these.

01:58Could you talk a little bit about the timing of this and the time frame, how the time frame is shortened?

02:03Yes, so we also provide real-time transaction monitoring, allowing financial institutions to get alerts

02:12on funds incoming or going off their platform, and they can be alerted in real time to these funds.

02:21So really, time is at the essence, and current processes, reporting, information sharing is painfully slow.

02:29And even though cryptocurrency and the blockchain enable tracing and freezing, time is really at the essence.

02:36We have to make sure that those insights are delivered in a timely fashion.

02:41Do you have any measurables on that?

02:44No, ma'am.

02:45Okay. All right. Just curious. Thank you.

02:47Mr. McLaughlin, how can FinCEN improve its communication and feedback mechanisms with banks

02:55and blockchain analytics firms following SARS and CTR submissions?

03:01Could you talk a little bit about that?

03:04Sure, and thank you for your question.

03:06As everybody can probably tell, the point of a lot of the things I've said today is creating an open

03:12and transparent two-way communication between the public and private sector so that we could begin focusing the resources

03:20that we have on the threats that our customers face on a daily basis.

03:24So working with FinCEN to establish a working group or a task force or whatever terminology you want to throw at it,

03:34would allow us to begin establishing and doing data analytics on what the government is seeing,

03:41what law enforcement is seeing, and what the private sector is seeing so that we can begin putting pen to paper

03:50on what a true risk-based approach means for financial crimes across the board, fraud, money laundering, sanctions,

03:58and terrorism, and terrorism finance.

04:00Are you getting any pushback or running into any roadblocks on that?

04:05I wouldn't say roadblocks or pushback.

04:09I think with the increased scrutiny that all of you are bringing to light today,

04:17I do think we are seeing across the industry a knowledge-sharing exercise taking place,

04:24whether that be informally or formally, but more work is needed.

04:30I think when we look at things like the FFIEC manual and the revisions there,

04:36I do think a public-private and law enforcement-type engagement would allow us to put down what the actual requirements are

04:45so that we can point to the crimes that we're trying to capture.

04:51And are you getting any pushback on that public-private partnerships?

04:56Personally, with the folks that I work with, no.

04:59It's just not official.

05:00It's outside the hallways here or at a convention or a conference that knowledge-sharing really exists.

05:10With that, Mr. Chairman, I yield back.

Lisa McClain Asks Witness If Blockchain Technology Can ‘Streamline’ The Process To Catch Fraud

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