The U.S. Treasury Department has announced it will cease enforcing a Biden-era rule aimed at curbing money laundering and shell company formation. In a news release, Treasury stated it will not impose penalties now or in the future if companies fail to register for its beneficial ownership information database, which was established during the Biden administration. Despite this, the rule remains legally in effect.
President Donald Trump praised the decision on his Truth Social media platform, calling the database “outrageous and invasive.” He described the rule as a disaster for small businesses and expressed satisfaction that the requirement would no longer be enforced.
The database, initiated in September 2022, was designed to collect personal information on the owners of at least 32 million U.S. businesses to combat illicit finance. The rule required most businesses with fewer than 20 employees to register their owners with the government starting January 1, 2024. Treasury officials, including former Secretary Janet Yellen, argued the regulatory burden would be minimal, costing about $85 per business, while aiding law enforcement in tracking money launderers.
The rule, authorized by the Corporate Transparency Act passed in 2021, has faced legal challenges. A small business lobbying group filed a lawsuit in 2022 to block the requirement, and on February 27, Treasury’s Financial Crimes and Enforcement Network announced it would not enforce the rule against non-compliant companies.
Business leaders have raised privacy and security concerns, arguing the database duplicates efforts by other government agencies. U.S. Secretary of the Treasury Scott Bessent described the decision as a victory for common sense and part of President Trump’s agenda to reduce regulatory burdens on small businesses.
— news from ABC News