Treasury ends enforcement of business ownership database meant to stop
shell company formation
[March 04, 2025] By
FATIMA HUSSEIN
WASHINGTON (AP) — The U.S. Treasury Department announced it will not
enforce a Biden-era small business rule intended to curb money
laundering and shell company formation.
In a Sunday evening announcement, Treasury said in a news release that
it will not impose penalties now or in the future if companies fail to
register for the agency's beneficial ownership information database that
was created during the Biden administration.
Despite efforts by small businesses to undue the rule in the courts, it
remains in effect.
On Sunday, President Donald Trump on his Truth Social media site praised
the suspension of enforcement of the rule and said the database is
“outrageous and invasive.”
“This Biden rule has been an absolute disaster for Small Businesses
Nationwide,” he said. “The economic menace of BOI reporting will soon be
no more.”
Supporters of the database raised alarm.
Ian Gary, executive director of the FACT Coalition, an advocacy group
for transparency in government and business, said “with one tweet, the
Administration has contradicted fifteen years of bipartisan work by
Congress to end the scourge of anonymous shell companies – which are a
favorite tool of our nation’s global adversaries and criminals including
fentanyl traffickers, money launderers, and tax cheats.”
In September 2022, the Treasury Department started rulemaking to create
a database that would contain personal information on the owners of at
least 32 million U.S. businesses as part of an effort to combat shell
company formations and illicit finance.
The rule required most American businesses with fewer than 20 employees
to register their business owners with the government as of Jan. 1,
2024. Small businesses are targeted because shell companies, often used
to hide illegally obtained assets, tend to have few employees.
[to top of second column] |
The U.S. Department of the Treasury building is seen in Washington,
Nov. 18, 2024. (AP Photo/Jose Luis Magana, File)
 Treasury officials, including former
Treasury Secretary Janet Yellen, said the regulatory burden would be
small, costing about $85 per business, but would offer benefits to
law enforcement officials seeking to track down money launderers and
other criminals. She said in January 2024 that more than 100,000
businesses had filed beneficial ownership information with Treasury.
The rule and its legislative authority — the Corporate Transparency
Act, an anti-money laundering statue passed in 2021 — have been
mired in litigation. In 2022, a small business lobbying group sued
to block the Treasury Department’s requirement that tens of millions
of small businesses register with the government. On Feb. 27,
Treasury's Financial Crimes and Enforcement Network said it would
not take enforcement actions against companies that do not file
beneficial ownership data with the agency.
Business leaders cite privacy and security concerns about the
database and say it is duplicative to other government agencies that
maintain corporate databases.
“This is a victory for common sense,” said U.S. Secretary of the
Treasury Scott Bessent on Sunday. “Today’s action is part of
President Trump’s bold agenda to unleash American prosperity by
reining in burdensome regulations, in particular for small
businesses that are the backbone of the American economy.”
All contents © copyright 2025 Associated Press. All rights reserved |
