The Treasury Department will not enforce the Corporate Transparency Act's reporting requirements and plans instead to issue a revised version of the rule.
The revised rule would apply only to foreign businesses in the U.S., so American entities won't be subject to the reporting regime,
"This is a victory for common sense," Secretary of the Treasury Scott Bessent said following the announcement. "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."
The Corporate Transparency Act requires most U.S. businesses to disclose their beneficial owners to the Treasury's Financial Crimes Enforcement Network with the aim of combating money laundering, fraud and financial crime by improving transparency in corporate ownership structures. The law defines a beneficial owner as anyone who controls 25% or more of a company or exercises substantial control over a company, either directly or indirectly.
Following Sunday's announcement, however, the Treasury Department will not impose penalties or fines for businesses that do not comply with the act's beneficial ownership reporting requirements. In a statement, the department said the decision aims to support small businesses and taxpayers while ensuring the rule is properly designed to serve the public interest.
Anti-corruption advocate Ian Gary, executive director of the Financial Accountability and Corporate Transparency Coalition, views the rule as a historic step in the fight against illicit finance and was dismayed by the announcement.
"With one
The act, enacted in 2021, mandated the creation of the national beneficial ownership information database to track corporate ownership, regulated which entities can access this data and placed strict confidentiality requirements and security measures on redisclosure of data.
Proponents of the law's reporting regime have called it the most significant advancement in U.S. anti-money-laundering efforts in a generation, saying that exposing hidden ownership structures would deter corrupt officials and criminals from exploiting the U.S. financial system. Former Treasury Secretary Janet Yellen
Despite its potential benefits, the rule has faced pushback from lawmakers and business groups. Some critics say the reporting requirements are overly complex and burdensome for small businesses. Republican lawmakers, led by then-House Financial Services Chairman Patrick McHenry, R-N.C., pushed for delays to the rule's rollout, citing concerns over compliance burdens and insufficient awareness among business owners. Financial institutions, however, largely supported the rule because it would have allowed them to use the database to satisfy customer due diligence concerns.
The act's enactment faced a whirlwind of legal battles, culminating in a recent Supreme Court
Despite multiple courts upholding the law's constitutionality, the Treasury appears to be rolling back the hard-fought progress, much to the chagrin of advocates like Scott Greytak, director of Advocacy at Transparency International U.S. Greytak called on the Trump administration to uphold the law's intent.
"This decision threatens to make the United States a magnet for foreign criminals, from drug cartels to fraudsters to terrorist organizations," Greytak said. "The U.S.'s national security, intelligence and law enforcement communities strongly supported the bipartisan Corporate Transparency Act because it stopped criminals from hiding behind anonymous shell companies, regardless of where those companies happened to be formed. … Narrowing the scope of the Corporate Transparency Act to exclude U.S.-based companies creates a clear loophole for criminals to exploit, and risks making the U.S. a haven for illicit financial activity."
The National Federation of Independent Business, which sued in Texas to overturn the BOI rule, welcomed the Treasury's decision to halt it and called for further action to hamper the law.
"NFIB greatly appreciates President Trump's strong support in this important effort to protect America's Small Business owners from what he correctly labeled an 'outrageous and invasive' Beneficial Ownership Information reporting requirement," said Adam Temple, NFIB's Senior Vice President for Advocacy. "NFIB will continue to work with Congress to fight for Congressional repeal of the underlying statute and regulations that intrude into the privacy of small businesses and create a vast new government database on Americans."
President Donald Trump, writing on Truth Social on Sunday night, praised the decision, characterizing the reporting regime as a "menace."
"Exciting news! The Treasury Department has announced that they are suspending all enforcement of the outrageous and invasive Beneficial Ownership Information (BOI) reporting requirement for U.S. citizens,"
