US Federal Staff Cuts Create 'Systemic Risk'
Experts from the Brookings Institution have warned that reductions in the U.S. federal workforce are creating systemic risks in critical areas. They argue that AI and automation cannot replace human expertise in complex government functions, including the investigation and enforcement of financial crimes, which could diminish oversight capacity at agencies like FinCEN.
- The U.S. Treasury's financial crimes unit, FinCEN, saw its staff cut by 11% in the year leading up to November 2025, with employment falling from 275 to 244 people. - FinCEN's workload has significantly outpaced its resources; over a recent five-year period, the number of Suspicious Activity Reports (SARs) filed by financial institutions increased by nearly 35%, while FinCEN's staffing grew by only 9%. - For Fiscal Year 2026, a workforce optimization plan is set to reduce FinCEN's staff by 30 full-time equivalents, aiming to save over $17.8 million through a Deferred Resignation Program and other attrition. - Even as criminals increasingly use AI for sophisticated financial crimes like deepfake scams and micro-fraud, the FBI emphasizes that AI is used internally only for investigative leads and that a human investigator is ultimately accountable for any actions taken. - The proposed 2026 budget for the FBI includes a $545 million reduction, with plans to cut its workforce by about 15%, or 5,800 employees, shifting focus away from complex financial crimes toward local violent crime. - Beyond financial crimes, wider staff reductions are affecting other critical areas, with the Social Security Administration planning to cut 7,000 workers and the FDA set to lose 3,500 employees, equivalent to 19% of its workforce. - The overall U.S. federal workforce has seen a net loss of nearly 220,000 employees since January 2025, dropping to its lowest level in a decade. - Financial institutions are also facing a shortage of compliance subject matter experts, which can heighten operational and compliance risks, especially as they try to keep up with evolving sanctions and anti-money laundering regulations.
