The U.S. Treasury Department has dramatically scaled back its enforcement of the Corporate Transparency Act (CTA), a Biden-era anti-money laundering law designed to expose anonymous shell companies. Under a new interim rule issued by the Financial Crimes Enforcement Network (FinCEN), domestic companies and U.S. citizens are now exempt from reporting beneficial ownership information (BOI)—a requirement that had loomed over millions of small businesses.
A Major Reversal in Federal Oversight
The rule, published on March 21, 2025, immediately halts enforcement of BOI disclosures for corporations, LLCs, and similar entities formed in the United States. It also exempts U.S. individuals from reporting even if they are beneficial owners of foreign companies doing business in the U.S.
The decision marks a sharp pivot from earlier policy goals. Originally enacted as part of the Anti-Money Laundering Act of 2020, the CTA sought to unmask the individuals behind legal entities, aiding law enforcement in cracking down on financial crimes like money laundering, tax evasion, and terrorism financing.
But mounting legal challenges, court injunctions, and industry pushback had already delayed implementation. Now, with FinCEN’s new rule, the U.S. has effectively gutted the core enforcement mechanism of one of its most high-profile transparency laws.
A Nod to Deregulatory Priorities
Treasury’s move aligns with President Trump’s broader deregulatory agenda. The administration has characterised the CTA as “outrageous and invasive,” particularly for small businesses that are unlikely to pose systemic financial crime risks. Executive Order 14192, titled “Unleashing Prosperity Through Deregulation,” laid the groundwork for the rollback, urging agencies to minimise burdens that stifle entrepreneurship.
FinCEN cited this executive mandate—and the CTA’s own language requiring regulators to balance transparency with minimal business disruption—as justification for narrowing the rule’s scope.
The Treasury Department stated it would now focus enforcement solely on foreign entities operating in the U.S., citing higher associated risks. These companies are still required to file BOI reports—unless their beneficial owners are exclusively U.S. citizens.
Compliance Costs Slashed
According to FinCEN, the change is expected to reduce compliance costs by approximately $9 billion per year, saving over 91 million hours in paperwork. Prior estimates had placed the law’s initial-year cost at $21.7 billion, with an ongoing $5.6 billion annual burden for new filings and updates.
For business owners and estate planners who had already spent time and money preparing for CTA enforcement, the reversal may feel like regulatory whiplash.
Reactions Across the Spectrum
Business advocacy groups welcomed the decision. Brad Close, President of the National Federation of Independent Business, praised the exemption as a win for privacy and small enterprise, calling the CTA “a massive intrusion into small businesses’ privacy.”
However, transparency advocates warned of the consequences. The FACT Coalition said the rollback “nullifies the statute” and undermines efforts to stop illicit finance. District attorneys and former government officials warned that the lack of BOI data could hinder investigations into fentanyl trafficking, terrorism, and sanctions evasion.
Albert Torres of the George W. Bush Institute added that weakening BOI enforcement risks undoing one of the “most pivotal advancements” in preventing abuse of the U.S. financial system.
What’s Next
FinCEN’s interim final rule takes effect immediately but remains open for public comment for 60 days. While significant changes to the rule appear unlikely, the agency has indicated it will finalise the regulation later in the year. The rule is legally permitted under the Administrative Procedure Act’s “good cause” exemption, allowing agencies to bypass the standard public notice requirement in urgent circumstances.
For now, American business owners can set aside their compliance binders. The federal government has paused one of its most ambitious transparency mandates in favour of deregulation. But the political and legal battles surrounding the CTA are far from over—and companies with international footprints should pay close attention.