This article was featured in the Today on TAP newsletter. Sign up for it here.
The Paris-based Financial Action Task Force, a global money laundering and terrorist financing watchdog, has likened shell companies to a “getaway car” for illicit actors. For transnational criminal networks and foreign kleptocrats alike, shell companies have been instrumental in hiding assets from the prying eyes of governmental authorities. This is precisely why Congress, with strong bipartisan support, passed the Corporate Transparency Act (CTA) as part of the National Defense Authorization Act six years ago. Moreover, when Secretary of State Marco Rubio was a U.S. senator in 2020, he touted the CTA as “the most significant anti-corruption and money laundering law in decades.”
A key plank of the CTA requires American companies and individuals to report beneficial ownership information to the Treasury Department’s Financial Crimes Enforcement Network, which defines beneficial owners as having at least a 25 percent stake in, or “substantial control” over a company. But that requirement is going away.
The Treasury Department has published its final rule permanently exempting companies and individuals in the U.S. from disclosing beneficial ownership information. The rule also deletes all beneficial ownership data that domestic companies have already submitted to the Financial Crimes Enforcement Network. The Treasury Department stopped enforcing the beneficial ownership information reporting requirement for American companies and individuals when it first announced the rule in March 2025. Law enforcement groups, national security experts, and small business associations have since been sounding the alarm on the rule and calling on the Treasury Department to reverse course.
The damning revelations stand in stark contrast to the Trump administration turning a blind eye to illicit actors that use shell companies to hide their ill-gotten gains.
This comes just a day after court documents revealed that federal agents infiltrated and surveilled several progressive organizations whose members mobilized to protest the Trump administration’s sweeping immigration crackdown in Minneapolis earlier this year. The documents were filed in connection with an ongoing criminal prosecution of 15 people who allegedly conspired to impede federal immigration authorities during the crackdown.
The damning revelations stand in stark contrast to the Trump administration turning a blind eye to illicit actors that use shell companies to hide their ill-gotten gains. Rather than ensuring law enforcement, intelligence officials, and tax authorities have the tools to uncover and dismantle illicit financial networks, President Trump seems more interested in weaponizing the federal government against those who dissent in the face of injustice.
There is little rhyme or reason for the Treasury Department’s final rule. If Treasury Secretary Scott Bessent is to be believed, it’s “a victory for common sense,” one that will eliminate a “burdensome” reporting requirement “without compromising our national security.”
Today on TAP
This story first appeared in our free Today on TAP newsletter, a weekday email featuring commentary on the daily news from Prospect reporters.
The idea that this is a burdensome reporting requirement is bunk. Here is what the law (which, by the way, has not been repealed) requires: name, address, birthdate, government identification number, and picture of the physical ID for the beneficial owner. The whole thing takes five minutes or less to declare, and given that these are wealthy owners of shell companies, obtaining an ID is not a legitimate barrier, unless they are foreign oligarchs trying to launder cash.
Sen. Elizabeth Warren (D-MA), ranking member of the Senate Banking Committee, said in a statement that the repeal “is a gift to cartels, criminals, and U.S. adversaries that exploit shell companies to move millions through our financial system.” She also called on Bessent to reverse the decision, and to testify in front of the committee “to explain why he’s putting American national security at risk.”
Other members of Congress have reacted similarly. Among them are Sens. Sheldon Whitehouse (D-RI) and Chuck Grassley (R-IA), both of whom were original sponsors of the TITLE Act, the precursor to CTA. In a joint statement, they said the rule “undermines the clear intent of the law,” adding that it “fails to use all available tools to protect Americans and crack down on illicit financial schemes.”
As the senators point out, the legality of the rule is questionable. The question now is not if a legal challenge will emerge, but when.
“This pretty obviously guts the statute and violates the law,” Brendan Ballou, founder of the Public Integrity Project, told the Prospect in an email. “We are investigating whether and how to challenge this illegal action.”
