Treasury Halts Enforcement of Controversial Anti-Money Laundering Measure

The U.S. Treasury is halting penalties for the Corporate Transparency Act, which has prompted celebration from Donald Trump, but critics warn of money laundering risks.

Key Takeaways

The U.S. Treasury Department will not enforce penalties related to the Corporate Transparency Act (CTA) against U.S. citizens or domestic companies.
President Donald Trump celebrated the decision, calling the reporting requirements “outrageous and invasive” and harmful to small businesses.
A federal court in Alabama ruled the Act unconstitutional in March 2024, stating Congress exceeded its authority.
Treasury plans to propose narrowing the Act’s scope to apply only to foreign reporting companies, with Secretary Bessent calling it a “victory for common sense.”
Critics argue suspending enforcement creates vulnerabilities in the U.S. financial system and could allow shell companies to hide illicit funds.

Trump Administration Suspends Enforcement of Anti-Money Laundering Law

The U.S. Treasury Department announced it will not enforce penalties related to the Corporate Transparency Act (CTA) against American citizens or domestic companies. This anti-money laundering law, which went into effect on January 1, 2024, requires certain businesses to report information about their beneficial owners – the individuals who ultimately own or control the company. The move comes amid multiple legal challenges to the law, including a federal court ruling in Alabama that declared the Act unconstitutional. The ruling determined that Congress had exceeded its authority in creating it.

President Donald Trump applauded the Treasury’s move, having long criticized the Beneficial Ownership Information (BOI) reporting requirements. In a social media post, he called it “exciting news” while saying that “this Biden rule has been an absolute disaster for small businesses nationwide.”

“Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses,” the department stated in its announcement explaining the suspension of enforcement. The decision represents a significant shift in how the government will handle this relatively new legislation.

Donald Trump Celebrates End of Corporate Transparency Act Measure https://t.co/kiycw8MHm6

— OnNow (@MyWayOnNow) March 3, 2025

Presidential Opposition and Court Challenges

Trump has been a vocal critic of the CTA, describing the BOI reporting requirement as an “outrageous and invasive” measure that negatively impacts small businesses across America. In his statements, Trump characterized the Act as an “absolute disaster” that placed unnecessary burdens on companies. Following the Treasury’s announcement, Secretary Scott Bessent echoed these sentiments, calling the decision a “victory for common sense” that would benefit American entrepreneurs and business owners.

The CTA has faced significant legal opposition beyond presidential criticism. Most notably, in March 2024, a federal court in Alabama ruled the Act unconstitutional. Alabama Senator Tommy Tuberville praised the court’s decision, describing the legislation as government overreach that improperly expanded federal power. The court challenge represented one of several legal obstacles facing the implementation of the Act, contributing to the Treasury’s eventual decision to suspend enforcement.

Debating Corporate Transparency Requirements

The Corporate Transparency Act, which was passed in January 2021, was designed to combat illicit financial activities by requiring certain businesses to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). The Act exempts larger companies with over 20 employees and $5 million in revenue, focusing its requirements primarily on smaller entities. This focus on smaller businesses became a key point of criticism from the Trump administration, which cited unnecessary compliance burdens on low-risk entities.

Reactions to the Treasury’s decision have been mixed across political and financial sectors. The FACT Coalition, which supports greater corporate transparency, criticized the court ruling that undermined the Act, arguing it allows shell companies to hide money from law enforcement. Financial crime experts warn that exempting domestic entities could create significant vulnerabilities in the U.S. financial system and potentially attract international scrutiny from bodies concerned with global financial transparency.

Future of Financial Transparency Regulations

While the Treasury has suspended enforcement against U.S. citizens and domestic companies, the department plans to propose narrowing the Act’s scope to apply primarily to foreign reporting entities. This represents a targeted approach that attempts to balance concerns about domestic regulatory burdens with the need to prevent international money laundering through U.S. financial systems. The announcement does not eliminate the law entirely but significantly changes its implementation and enforcement mechanisms.