After the attacks of September 11, 2001, the government began cracking down on hidden transfers of wealth. The purpose was to prevent money laundering that might finance terrorism. Some of this was codified in the USA PATRIOT Act. After the financial collapse of 2008, other safeguards were added. All this strengthened the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), with the side benefit of helping regulatory agencies track down other uses of concealed wealth, whether or not they are related to national security.
But in the ensuing quarter-century, extreme wealth became ever more concentrated, and oligarchs became ever more crafty at hiding the true ownership of wealth through trusts and corporate forms that are utterly opaque to financial regulators, the IRS, and the national-security establishment, much less the public. The incorporation laws of four states, led by Delaware and increasingly crypto-friendly Wyoming, make it possible to create a corporation without disclosing in any way its true beneficial owners.
As national-security concerns as well as deepening financial abuses came to the fore again, reformers began pushing back. Their signal achievement was a law enacted in 2020 called the Corporate Transparency Act, which requires the disclosure of the beneficial ownership of all shell corporations and trusts. The CTA required business entities to report details about their beneficial owners—individuals who own 25 percent or more of the entity or who exercise substantial control.
The law was passed with wide bipartisan support in the closing days of the first Trump administration. It was tucked into the National Defense Authorization Act of 2021 and passed over Trump’s veto, the only override during his entire administration. The passage caught the oligarchy off guard.
The incoming Biden administration issued draft regulations in early 2021. Because of the sheer complexity of all the ways that wealth is hidden, plus litigation against the CTA, it took until the closing days of the administration for final regulations to be issued, specifying that all disclosures had to be made by January 1, 2025. At last, the true ownership of hidden oligarchic wealth would have to be disclosed. Law firms began issuing guidance to their clients on compliance with required disclosures.
A secondary benefit would be that such newly disclosed wealth could be taxed. It’s estimated that about a trillion dollars in uncollected taxes are owed to the IRS every year, the lion’s share from very rich people who hide their assets and related income streams. That money could be used to reduce other people’s taxes, finance valued public spending, reduce the deficit, or all three.
But it was not to be. On March 2, Trump’s incoming Treasury secretary, Scott Bessent, announced that he would not enforce any penalties on failure to report beneficial ownership. Later that month, a final rule from FinCEN ensured that U.S. businesses and individuals would no longer have to report beneficial ownership information to FinCEN, rendering the Corporate Transparency Act moot for over 99 percent of American business entities. This action got virtually no notice in the mainstream press.
“This is a victory for common sense,” Bessent said in a statement back in March. “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.”
According to Jeffrey Winters, the author of the forthcoming definitive book on how oligarchs conceal wealth, The Blind Spot: How Oligarchs Dominate Our Democracy, “The United States has long been one of the most important secrecy jurisdictions in the world because it is possible to form anonymous shell corporations whose owners are impossible to discover.” Bessent’s derailment of the CTA, Winters added, “was a major victory for those who benefit from secrecy in financial transactions, and a setback for transparency and national security.”
The episode sheds light on the odd Trump alliance of angry working-class people and unaccountable oligarchs. The more Trump feeds his base the red meat of anti-immigrant and anti-DEI rants and actions, the more he conceals the true nature of his presidency.
Some of this is hidden in plain view, like Trump’s shameless self-enrichment. Some of it, like the gutting of the CTA, is technical and opaque, much like the hiding of oligarchic wealth itself. It remains to be seen how long it will take before the disaffected people who put Trump in office will notice how he is adding to their economic insecurity. Investigative work like Winters’s book can help, but only if it leads to action, and only if ordinary people have convincing evidence that America does not have two oligarchic parties.
