Ms Haugen - who last year outed Facebook for knowingly using algorithms to promote divisive content - appeared before the committee into online safety on Thursday.
She says Facebook disproportionately spends its safety budget in the United States and as a result the rest of the world misses out.
"Because Facebook knows they operate in the dark - they don't have to tell the truth about anything - they continue to underinvest because they can get away with the bare minimum," she said.
Ms Haugen says social media companies can no longer be left to self-regulate when it comes to safety.
"If we allow Facebook to write their own regulations ... they will continue to mislead us and underinvest in the most basic safety systems," she said.
"They could make very simple changes and lose a fraction of profit to make things safer."
Ms Haugen said changes could include requiring a moderator be appointed in groups of 10,000 people or more and removing share buttons in some cases, asking people to copy and paste the content to their page instead.
In January, employees from Meta - the company behind Facebook - told the committee safety was at the core of the business.
Policy head Mia Garlick said any reports Facebook put profits above the safety of their users were "categorically untrue".
The committee is due to present a final report to parliament by mid-February.
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