The Trump administration has significantly weakened a Treasury Department regulation aimed at combating money laundering. This regulation mandated that shell companies disclose their owners and beneficiaries. On Sunday, the Treasury announced a pivotal decision: it would “not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines.” Additionally, it confirmed that no penalties would be enforced against U.S. citizens or domestic reporting companies or their beneficial owners once the upcoming rule changes take effect.
Treasury Secretary Scott Bessent emphasized that this decision aligns with President Trump’s agenda to enhance American prosperity by removing burdensome regulations. He noted that such regulations disproportionately affect small businesses, which are considered the backbone of the American economy. The suspended rule was part of the Corporate Transparency Act (CTA), enacted in 2021, which required certain businesses to report information about their beneficial owners. Beneficial owners refer to individuals who directly or indirectly own or control a business.
President Donald Trump expressed his approval of the Treasury’s announcement through a post on Truth Social. He described the news as “exciting” and criticized the beneficial ownership information (BOI) reporting requirement as an “outrageous and invasive” regulation affecting U.S. Citizens. Trump stated, “This Biden rule has been an absolute disaster for small businesses nationwide.” He also mentioned that the Treasury is in the process of finalizing an Emergency Regulation to formally suspend the BOI reporting rule for American businesses, declaring that the economic burden of BOI reporting would soon be lifted.
The enforcement of the Corporate Transparency Act has faced significant opposition from Republicans and organizations, including the American Bar Association, since its introduction. Critics argue that the reporting requirements imposed by the CTA place an undue burden on small businesses and American companies. Although the CTA’s provisions on beneficial ownership were scheduled to be enforced starting in January, various court orders challenging the law led to a suspension of enforcement from December 2024 to February of this year.
The Corporate Transparency Act was part of the broader efforts initiated by the Biden administration to address corporate cronyism and tax evasion. This multi-agency initiative is now facing significant rollbacks under the Trump administration, raising questions about the future of corporate transparency and accountability in the United States.
