The U.S. Treasury Department has announced that it will not enforce a Biden-era small business rule designed to combat money laundering and shell company formation. The rule, which required most American businesses with fewer than 20 employees to register their business owners with the government, has faced opposition from small business advocates.
The beneficial ownership information database, created during the Biden administration, was intended to track down money launderers and criminals by collecting personal information on the owners of at least 32 million U.S. businesses. Despite efforts to challenge the rule in court, it remains in effect.
President Donald Trump, in a statement on his Truth Social media site, praised the suspension of enforcement of the rule, calling the database 'outrageous and invasive.' He described the rule as a 'disaster for Small Businesses Nationwide' and expressed relief that the burden of reporting beneficial ownership information would soon be lifted.
The Treasury Department had estimated that compliance with the rule would cost businesses around $85 each but argued that the benefits to law enforcement officials would outweigh the costs. Former Treasury Secretary Janet Yellen reported that over 100,000 businesses had already filed beneficial ownership information with the agency by January 2024.
The Corporate Transparency Act, the legislative authority behind the rule, was passed in 2021 as part of anti-money laundering efforts. However, the rule has faced legal challenges, with a small business lobbying group suing to block the requirement for millions of small businesses to register with the government.
In response to the ongoing litigation, the Treasury's Financial Crimes and Enforcement Network announced that it would not take enforcement actions against companies that do not file beneficial ownership data with the agency. Business leaders have raised concerns about privacy and security regarding the database, arguing that it duplicates existing government databases.
U.S. Secretary of the Treasury Scott Bessent hailed the decision to suspend enforcement of the rule as a victory for common sense and part of President Trump's agenda to reduce regulatory burdens on small businesses, which are vital to the American economy.
