The Treasury Department's
A major banking trade group that supported the rule says it backs the administration's move, but remains concerned about the issue that prompted the bipartisan law that established the reporting regime, the Corporate Transparency Act.
"Banks support the administration's efforts to reduce the reporting burden on small businesses," an American Bankers Association spokesperson said. "Likewise, we share the administration's interest in preventing bad actors from accessing the financial system, including through anonymous shell companies, which remains a widespread problem and is the reason Congress passed the CTA in the first place."
The CTA, enacted as part of a defense authorization bill for fiscal year 2021, mandated the creation of the national beneficial ownership information database to track the true owners of companies doing business in the U.S.
The law requires most U.S. businesses to disclose their beneficial owners to the Treasury's Financial Crimes Enforcement Network, known as Fincen, with the aim of combating money laundering, fraud and financial crime. The CTA defines a beneficial owner as anyone who controls 25% or more of a company or exercises substantial control, either directly or indirectly.
The ABA previously advocated for the Treasury database as it could ease the burden of identifying customers. In a 2023
But while banks backed the effort to disclose businesses' true owners, other business trade groups — such as the National Federation of Independent Business — have opposed the idea for some time. Joshua McLeod, NFIB's director of federal government relations,
"The banks were going to collect this information," McLeod said. "They didn't want to, and so they helped push this responsibility onto Fincen, and it became kind of the behemoth that it is now."
The regulations also faced pushback from certain lawmakers who say the reporting requirements are overly complex and burdensome for small businesses. Republican lawmakers in the House
Critics of the reporting standards have elevated their concerns to members of President Trump's inner circle. An account on X, formerly known as Twitter,
But while the pushback against the CTA and the mandatory reporting requirements have been growing, not all small-business groups have been opposed. John Arensmeyer, founder and CEO of the Small Business Majority
The Treasury Department plans to finalize a revised rule this year focusing on foreign companies, according to a Fincen spokesperson, exempting domestic companies from mandatory reporting requirements. The department has said it's aiming to support small businesses and taxpayers, while ensuring the rule is properly designed to serve the public interest.
The CTA has emerged as a source of controversy despite having passed with overwhelming bipartisan support. The House approved it 322–87 as part of the Fiscal Year 2021 National Defense Authorization Act, and the Senate later voted 81–13 to
In addition to industry groups like the ABA, law enforcement groups supported the reporting regime because it would allow law enforcers to access ownership information valuable for rooting out shell companies. Groups like the
Transparency advocates and bipartisan supporters of the underlying law are continuing to raise alarm not only over the loss of a measure designed to expose illicit finance, but also over the diminished utility for the financial system.
The rollback has drawn sharp criticism from supporters of the CTA, who argue the move undermines one of the most significant anti-money-laundering reforms in recent decades. Rep. Brad Sherman, D-Calif., one of the bipartisan cohort of co-sponsors of the CTA, condemned the decision, calling it a concession to white-collar criminals and a step backward in the fight against illicit finance.
"This is yet another pro-crime action by the Trump Administration," Sherman wrote in an email. "It's not surprising that the first time we elect the president who's been convicted of white-collar crime that we get an administration that seeks to protect white-collar criminals. The CTA would have also improved sanctions compliance for banks, meaning this action from the Trump Administration only serves to benefit the likes of Hamas, Hezbollah, and the Houthis."
Erica Hanichak, deputy director of the corporate transparency advocacy group the FACT Coalition — longtime advocates of the regime — argue beneficial ownership reporting is a widely accepted global standard that helps banks and enforcement agencies fight illicit finance.
"More than 130 countries have already moved forward with similar types of central registries," she said. "And some of the largest banks are already complying with similar requirements abroad. It takes small businesses 10 minutes — maybe 20, in the most extreme cases — to comply."
But NFIB's McLeod questioned the need for the law at all, arguing that shell companies and money laundering were already illegal before the CTA.
"I wish people would not have shell companies, and I think our members would agree they do the right things and don't really want to have their name soiled by these bad actors," McLeod said. "But at the same time, Congress passing a law is not going to all of a sudden make everyone be a law-abiding citizen …do we need another law? Or do we just need to enforce what is on the books already?"
He called limiting the rule to foreign entities a logical step toward narrowing the law's scope and urged the Treasury to go further by deleting previously filed data from domestic companies.
"[Limiting the rule to foreign businesses] is a more tailored way to get at the concerns of the law's proponents," he said. "Ideally the statute would go away. But we're also supportive of what the Trump administration did in March to exempt U.S. businesses. We would ask the Treasury and Congress to go a step further and delete the [beneficial ownership information] of U.S. businesses that have already filed."
McLeod argued that bad actors already violate existing laws, and the CTA won't deter them. He also criticized how the Fincen database could be accessed more freely than other kinds of government records.
"If you went to the IRS, they would need to have a warrant, but you don't need that warrant to go to the Fincen database, and so you're going to have much larger access from, from local, state, federal, international law enforcement and intelligence agencies," he said. "It's the weaponization of information that is what people are concerned about with government databases these days."
Hanichak said those notions of weaponized data and legal penalties are overblown because only willful violations of the reporting requirements are subject to penalties. Accessing the Fincen database does not require warrants, but it does require police to meet steep legal thresholds, she said, including court approval for state and local law enforcement.
"There are specific thresholds and designations that federal law enforcement would need to undergo to be able to access this information," Hanichak said. "State and local law enforcement need to get approval and clearance from a court of confident jurisdiction. This is not some fishing expedition — these inquiries have to be certified and connected with an ongoing open investigation and, likewise, there are very strict penalties for mishandling data."
While opponents are arguing the statute should ideally be scrapped, Hanichak noted that Congress passed the CTA with bipartisan support to close a longstanding loophole in U.S. anti-money-laundering law.
"The majority of small businesses in America actually want you to know who owns them. It's part of building trust with their communities," Hanichak said. "This decision [to exempt domestic companies] doesn't appear to have been made with the input from law enforcement and financial services industry and other key stakeholders. Congress was very clear — in a bipartisan way — that it wanted the most significant update to anti-money-laundering law in a generation, to move forward."
