Treasury Department Will Not Enforce Penalties Under Anti-Laundering Rule

The U.S. Treasury Department has revealed it will halt fines under the Corporate Transparency Act (CTA), sparking a debate between balancing transparency and burdens.

Quick Takes

President Donald Trump has praised the decision to withhold fines, calling the CTA “outrageous and invasive.”
The Corporate Transparency Act aims at curbing illegal financial activities by increasing beneficial ownership transparency.
Legal challenges and criticism arose, particularly from low-risk businesses facing compliance burdens.
The Treasury plans to focus the Act on foreign reporting companies.

U.S. Treasury Decision Sparks Reaction

President Donald Trump openly celebrated the Treasury Department’s decision to halt enforcement of a controversial Biden-era anti-money laundering rule, viewing the move as protection for small businesses. The Corporate Transparency Act, which went into effect in January 2024, sought to combat money laundering by requiring companies to disclose their beneficial owners. However, enforcement of related fines has been suspended following legal and political pushback.

The suspension means the Treasury Department will not impose penalties on U.S. citizens and domestic companies for failing to comply with the beneficial ownership information reporting requirements. Trump labeled the requirements as “outrageous and invasive,” arguing they disproportionately harm small businesses. Meanwhile, Secretary of the Treasury Scott Bessent described the move as a “victory for common sense.”

The U.S. Treasury Department says it will not enforce an anti-money laundering law that requires millions of business entities to disclose the identities of their real owners.

— More Perfect Union (@MorePerfectUS) March 3, 2025

Court Ruling and Legislative Reactions

A federal court in Alabama deemed the Act unconstitutional in March 2024, stating Congress had overstepped its boundaries. Reaction to this ruling was swift, with the FACT Coalition cautioning it could open doors for criminals hiding funds behind shell companies. The Act initially required specific disclosures from various businesses but exempted larger corporations with more than 20 full-time workers.

Alabama Senator Tommy Tuberville criticized the Act for being an example of government overreach. While enforcement of the rule has been halted for now, the Treasury reportedly plans to propose narrowing the Act’s application, targeting foreign entities. However, proponents warn that easing domestic restrictions could foster vulnerabilities in the U.S. financial system.

Future of Financial Transparency

The Corporate Transparency Act remains a point of contention, with divided opinions over its efficacy and impact. While critics argue that the U.S. could become more susceptible to money laundering due to lax regulations, supporters highlight the significance of improved disclosure in preventing illegal financial practices.

The unfolding legal challenges and policy adjustments indicate the complexity of balancing economic freedom with financial security. Whether the Treasury’s move will ultimately bolster the country’s defenses against illicit financial activities or introduce new risks remains to be seen.