The U.S. Department of Treasury just ended a rule that was used to register and document the use of shell companies, sometimes used to cover up money laundering, illegal business practices, hiding assets or income used to influence elections, etc. The rule will only be enforced for foreign business holders. The rule which put in place the Beneficial Ownership Information reporting (BOI) which required all businesses to register their business or businesses on a website with the owners name; date of birth; address; and identification number from a state issued drivers license, ID or a passport.
Rolling back regulation and ending enforcement of this rule could lead to an increase in: illegal money flooding into our elections, domestic drug trafficking, or other nefarious business practices, by affording them less red tape and accountability. Another problem, it could embolden U.S. citizens acting on behalf of a foreign person, government, or criminal, to open a shell corporation. (Also, if you were not aware, approximately 80% of Fentanyl that comes over our border was transported by U.S. citizens).
The Treasury Secretary, Scott Bessant, put out a statement in regard to the rollback of this rule, “The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.
“This is a victory for common sense,” said U.S. Secretary of the Treasury Scott Bessent. “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.””
The rules came amidst the 2022 invasion of Ukraine and our ramped up sanctions on Russia, a country known for using shell corporations to hide its assets in Western countries. Shell Corporation’s are legal but they have been used for illegal activities and this rule helped in combating money laundering; which is not just a foreign business problem.
When the bill, The Corporate Transparency Act was proposed in 2019 it got bipartisan support and passed in December of 2020. When the BOI rule was introduced, “The Treasury Department said it was moving to create a database that will contain personal information on the owners of at least 32 million U.S. businesses as part of an effort to combat illicit finance. Treasury officials said the new rule represents a sea change in the world of corporate transparency.”
According to the Financial Crimes Enforcement Network (FinCEN) website (who regulates BOI under the Treasury Department), “The mission of the Financial Crimes Enforcement Network is to safeguard the financial system from illicit activity, counter money laundering and the financing of terrorism, and promote national security through strategic use of financial authorities and the collection, analysis, and dissemination of financial intelligence.”
The ending of the enforcement of this rule seems counterintuitive to the fight against crime to ensure America's safety.
https://apnews.com/article/treasury-beneficial-ownership-database-finance-bessent-trump-a903100907851cca1930511f96e9686d
https://home.treasury.gov/news/press-releases/sb0038
https://apnews.com/article/russia-ukraine-putin-politics-business-bc1631f23fe2f14273dcaed6fbd3883b
https://www.fincen.gov/boi
https://home.treasury.gov/news/press-releases/jy2015
https://www.uschamber.com/co/start/strategy/small-business-corporate-transparency-act
https://www.fincen.gov/about/mission#:~:text=The mission of the Financial,analysis%2C and dissemination of financial
https://www.reuters.com/business/finance/us-congress-bans-anonymous-shell-companies-2020-12-11/
https://campaignlegal.org/update/secret-election-spending-proliferates-through-shell-companies
https://www.ussc.gov/sites/default/files/pdf/research-and-publications/quick-facts/Fentanyl_FY21.pdf
https://www.cato.org/blog/us-citizens-were-80-crossers-fentanyl-ports-entry-2019-2024
https://www.congress.gov/bill/116th-congress/house-bill/2513
