Treasury scraps reporting rule for U.S. small business owners
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Kent Nishimura | Los Angeles Times | Getty Images The U.S. Department of Treasury is scrapping a requirement for U.S. small businesses to report information about their owners to the federal government. It’s the latest twist in an on-again-off-again saga for the fledgling rule. The Corporate Transparency Act, passed in 2021, required millions of businesses to report basic information on their “beneficial owners.” By identifying who owned certain entities, lawmakers sought to curb criminal activity and illicit finance conducted through opaque shell companies. The rule was set to take effect on March 21, following months of delays in court. It carried financial penalties, potentially thousands of dollars, for noncompliance. However, the Financial Crimes Enforcement Network — also known as FinCEN, which is part of the Treasury — issued an interim final rule on March 21 exempting all U.S. citizens and U.S. companies from the reporting requirement. The rule is open to public comment and set to be finalized later this year. ‘This absolutely waters down the rule’ If it stands, the FinCEN rule would be a significant departure from the purpose of the Corporate Transparency Act and would offer loopholes for criminals to continue laundering money through U.S. entities, according to legal experts. “This absolutely waters down the rule,” said Erin Bryan, partner and co-chair of the consumer financial services group at Dorsey & Whitney. “Plenty of shell companies are going to be exempt from reporting now,” she added. Some foreign companies that do business in the U.S. will still be required to file reports, FinCEN said. FinCEN estimates that this revised reporting requirement will apply to about 20,000 entities in the first year — greatly reduced from the 32.6 million entities, including certain corporations, limited liability companies and others previously estimated to be subject to the reporting requirement in…
Filed under: News - @ March 25, 2025 8:22 pm