Corporate Transparency Act Measure Scrapped — Trump Celebrates Decision

President Trump is praising the U.S. Treasury Department for announcing it will stop enforcing the fines and penalties for the Corporate Transparency Act (CTA), a law that requires businesses to disclose their beneficial owners to the federal government.

The announcement was made on Sunday by Treasury Secretary Scott Bessent and halts the Beneficial Ownership Information (BOI) reporting requirement. The reporting rule was put in place by the Biden administration and was mandatory for millions of small businesses starting January 1, 2024.

What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) was passed by Congress in January 2021 to prevent financial crimes like money laundering and tax evasion. It requires small businesses to submit ownership information to the Financial Crimes Enforcement Network (FinCEN), identifying individuals who own at least 25% of the company or have significant control.

The law mainly applies to small businesses, while larger companies with more than 20 full-time employees and over $5 million in revenue are exempt.

Trump’s Take

Trump posted on Truth Social that the rule is “outrageous and invasive” and said the reporting requirement has been “a disaster for small businesses.” He said the Treasury is stopping enforcement and is now working on an emergency regulation to suspend the requirement for domestic businesses.

Treasury’s Statement

Treasury Secretary Scott Bessent called it a “victory for common sense,” saying the pause reflects the Trump administration’s commitment to reducing regulatory burdens on small businesses.

The Treasury said the suspension will allow the government to review the rule and rework it to make sure it’s fair, workable, and meets transparency goals without harming small businesses.

Legal Stuff

The Corporate Transparency Act has been challenged in court since it was passed. In March 2024, a federal court in Alabama ruled it unconstitutional, saying Congress had gone too far.

Business groups cheered the court’s decision while anti-corruption groups like the FACT Coalition raged against it. They warned that if the law was suspended, crooks would be able to hide illegal money in anonymous shell companies, and money laundering and financial crime would be harder to fight.

Looking Ahead

The Treasury Department will propose a new rule that will only apply to foreign companies and not to most US small businesses.

This is a big deal in US financial transparency policy and aligns with Trump’s overall goal of reducing regulations while raising concerns among financial crime experts of more corporate secrecy.

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