The U.S. Department of Treasury has eliminated a requirement for U.S. small businesses to report information about their owners to the federal government, according to a recent CNBC report.
The Financial Crimes Enforcement Network (FinCEN), part of the Treasury, issued an interim final rule on March 21 exempting all U.S. citizens and U.S. companies from the beneficial ownership reporting requirement that was mandated under the Corporate Transparency Act of 2021. The original rule was designed to help curb criminal activity and illicit finance conducted through shell companies.
Previously, an estimated 32.6 million entities would have been subject to the reporting requirement in the first year. Under the revised rule, only about 20,000 entities—primarily foreign companies doing business in the U.S.—will be required to file reports.
FinCEN Director Andrea Gacki wrote that the policy change aligns with President Trump’s deregulatory directive, stating that the Treasury “reassessed the balance between the usefulness of collecting [beneficial ownership information] and the regulatory burdens imposed by the scope of the Reporting Rule.”
Legal experts have criticized the change, with Erin Bryan, partner at Dorsey & Whitney, noting: “This absolutely waters down the rule. Plenty of shell companies are going to be exempt from reporting now.” Critics argue that the interim rule creates loopholes that would allow criminals to evade detection by simply operating within the United States.
The interim rule is open to public comment and set to be finalized later this year.
For the complete story, read the full article on CNBC.
