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The Trump administration has finalized a rule that will allow shell companies and other questionable entities to conceal their ownership from federal investigators, in a move that critics say will only further facilitate corruption in the U.S.
The Treasury Department’s Financial Crimes Enforcement Network announced on Tuesday that it is ending the regulation that requires companies to disclose beneficial ownership. This refers to situations in which a person actually controls and benefits from a company, but legal documents list the company under a different name, like a bank or accountant.
Treasury Secretary Scott Bessent said the reporting requirements were “red tape” and “burdensome,” and said the repeal will help small business owners. However, critics have lambasted the rule as paving the way for a host of financial crimes and a gift to wealthy Americans.
The new rule “serves only one purpose: to make corruption easier to conceal,” said Casey Michel, corruption expert and senior nonresident fellow for the Center for International Policy.
“The only people celebrating the move are ultra-wealthy Americans and kleptocratic regimes around the world who use anonymous shell companies to squirrel away their money, hiding their ill-gotten gains from public accountability,” Michel went on. “The move will only increase corruption in the US, and further transform US politics into a pay-to-play racket in which the wealthy few benefit at the expense of the rest of us.”
The repeal effectively guts the Corporate Transparency Act, which was passed within the 2021 National Defense Authorization Act. The legislation was originally introduced by Marco Rubio, then a senator, who championed it in 2020 as “the most significant anti-corruption & money laundering law in decades.”
Sen. Elizabeth Warren (D-Massachusetts) excoriated the new rule as a “gift” to those who commit financial crimes and “exploit shell companies to move millions through our financial system.” Warren, the top Democrat on the Senate Committee on Banking, Housing, and Urban Affairs, called on Bessent to testify before the committee about the rule.
The Financial Accountability and Corporate Transparency (FACT) Coalition, a financial crimes watchdog alliance of over 100 groups, said that the rule opens the “floodgates” for those wishing to commit financial crimes in a statement.
“By failing to fulfill Congress’ mandate for greater financial integrity, the Treasury Department has handed a major victory to U.S. adversaries, corrupt officials, fraudsters, and tax evaders who use our financial system to move and hide illicit wealth,” said FACT Coalition co-founder Erica Hanichak.
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