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- The U.S. Treasury Department announced it will not enforce a rule requiring small businesses to register their beneficial ownership information.
- This rule, part of the Corporate Transparency Act, aimed to combat money laundering and shell company formations.
- The decision has been praised by President Trump and criticized by those advocating for stronger anti-money laundering measures.
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Essential Context
The U.S. Treasury Department’s decision to halt enforcement of the business ownership database rule is a significant shift in policy. This rule, enacted during the Biden administration, required most American businesses with fewer than 20 employees to register their business owners with the government as of January 1, 2024.
Core Players
- U.S. Treasury Department – Announced the end of enforcement for the business ownership database rule.
- President Trump – Current President who praised the decision and called the database “outrageous and invasive.”
- Janet Yellen – Former Treasury Secretary who supported the rule, citing its benefits for law enforcement.
- Small Business Lobbying Groups – Have been vocal about the rule’s burdens and privacy concerns.
Key Numbers
- 32 million – Estimated number of U.S. businesses affected by the rule.
- $85 – Estimated cost per business to comply with the rule.
- 100,000 – Number of businesses that had filed beneficial ownership information as of January 2024.
- 20 employees – Threshold for businesses required to register under the rule.
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The Catalyst
The decision to end enforcement was announced on Sunday, March 3, 2025, by the Treasury Department. This move follows ongoing litigation and criticism from small business groups who argued the rule was burdensome and invasive.
President Trump praised the decision, calling the database “outrageous and invasive” and stating that “this Biden rule has been an absolute disaster for Small Businesses Nationwide.”
Inside Forces
The rule was part of the Corporate Transparency Act, an anti-money laundering statute passed in 2021. It aimed to curb shell company formations and illicit finance by requiring businesses to disclose their beneficial owners.
Despite the regulatory burden being estimated at a relatively low $85 per business, many small businesses and their lobbying groups have fought the rule in courts, citing privacy and security concerns.
Power Dynamics
The relationship between the current administration and small business interests has been a key factor. The Trump administration has been keen on rolling back what it perceives as burdensome regulations, aligning with the interests of small business groups.
This decision highlights the shift in policy priorities under the current administration, focusing on reducing regulatory burdens rather than enforcing anti-money laundering measures.
Outside Impact
The impact of this decision will be felt widely. Law enforcement officials may face challenges in tracking down money launderers and other criminals without access to the beneficial ownership information.
Small businesses, on the other hand, will no longer have to comply with the rule, potentially easing their administrative burdens but also raising concerns about increased vulnerability to money laundering activities.
Future Forces
The future of anti-money laundering efforts may be reevaluated in light of this decision. Congress or future administrations could revisit the Corporate Transparency Act or propose new legislation to address the concerns raised by both sides.
Additionally, this move could set a precedent for how other regulatory measures are enforced, especially those affecting small businesses.
Data Points
- 2021: The Corporate Transparency Act was passed.
- September 2022: Treasury Department started rulemaking for the beneficial ownership database.
- January 1, 2024: The rule requiring businesses to register their beneficial ownership information was set to take effect.
- February 27, 2025: Financial Crimes and Enforcement Network announced it would not take enforcement actions against non-compliant companies.
The cessation of enforcement for the business ownership database rule marks a significant policy shift, reflecting the current administration’s stance on regulatory burdens. This decision will have far-reaching implications for both small businesses and law enforcement efforts to combat money laundering.
