Treasury defangs anti-money-laundering law (2025)

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The Trump administration is exempting tens of millions of companies from an anti-money-laundering law that was passed during President Donald Trump’s first term to crack down on anonymous shell companies that facilitate financial crimes.

The move, which the Treasury Department formalized in a new rule on Friday night, effectively dismantles a key part of the law, the Corporate Transparency Act, which requires businesses to reveal their true owners to the government. And it’s poised to open a new front in the long-running battle over the future of the law.

Small business groups are cheering what they see as a long-overdue rollback of onerous regulations. But some law enforcement groups are preparing to lobby the administration to change course, warning that the move will cripple efforts to track illicit finance.

The new rule slashes the number of businesses required to report beneficial ownership information. Treasury had previously estimated that 32 million entities would be subject to the requirement. Under the revised policy, the department says only about 11,600 foreign firms operating in the U.S. would have to disclose their ownership on average each year.

There was a bipartisan consensus in Washington that businesses needed more time to comply with the law. Last month, the House voted unanimously to pass a one-year extension. And the Trump administration had signaled its own delays while it continued defending the constitutionality of the law in court.

But the sweeping regulatory maneuver to excuse all U.S. businesses from the requirement came as a surprise when it was announced by the administration earlier this month. Trump blasted the reporting requirements as “outrageous and invasive“ and an “economic menace.”

The decision marks somewhat of a reversal for the administration from the first Trump term. Treasury officials under then-Secretary Steven Mnuchin privately advocated for the law, according to lobbyists who worked on the legislation at the time, and the White House issued a favorable statement in support of an earlier version of the legislation that ultimately became law.

But Treasury Secretary Scott Bessent has “reassessed the balance between the usefulness of collecting [beneficial ownership information] and the regulatory burdens imposed” by the reporting requirements, the agency wrote in its regulatory notice Friday.

Bessent invoked a provision of the law that allows him to exempt companies from having to disclose their true owners if he determines it wouldn’t serve the public interest and wouldn’t yield “highly useful” information to law enforcement and intelligence agencies. Attorney General Pam Bondi and Homeland Security Secretary Kristi Noem also signed off on the categorical exemption of all U.S. businesses from the law, according to the notice.

The new policy retains the reporting requirements only for foreign companies that are registered to do business in the U.S., a category of businesses that Treasury said “pose a heightened risk to U.S. national security.”

The National Federation of Independent Business commended the White House for recognizing “that American small business owners are not money launderers or criminals, but the heart and soul of our communities,” said Jeff Brabant, the group’s vice president for federal government relations. “The so-called Corporate Transparency Act is an unconstitutional power grab and should have been called the Spying on Small Business Act.”

NFIB is spearheading an effort to repeal the law—a long-shot bid in this Congress but one that has gained some traction among Republican lawmakers. But the group and other business organizations have also had success in legal challenges that are working their way through the courts.

But proponents of the law say the Trump administration is erasing years of progress toward combating illicit finance.

The administration’s exemption of all U.S. companies “is tantamount to nullifying the statute,” said Ian Gary, executive director of the FACT Coalition, adding that the decision is “very unlikely to be upheld in court.”

Who might challenge it remains unclear. But state attorneys general and local law enforcement agencies, which were set to gain access to the Treasury’s database of business ownership records, could argue they have suffered harm.

“Access to beneficial ownership information is a necessity for prosecuting crimes,” Nelson Bunn, executive director of the National District Attorneys Association, said in a statement. The new rule, he said, “threatens to deny law enforcement the vital information they need to pursue illegitimate business fronts that jeopardize U.S. national security and public safety.”

Law enforcement groups have already begun discussions with Treasury and White House officials and plan to escalate their efforts, said Frank Russo, who lobbies on behalf of several law enforcement organizations as vice president at Modern Fortis.

Law enforcement officials are open to “appropriate exemptions” and efforts to reduce compliance burdens on small businesses, Russo said. But they want to ensure that federal, state and local investigators retain access to critical ownership data.

What’s next: The elimination of the reporting requirements takes effect in the coming days when the interim rule is published in the Federal Register. Treasury will accept public comments for 30 days before finalizing the policy later this year.

IT’S MONDAY — Drop me a line at [emailprotected]. And for econ policy thoughts, Wall Street tips, personnel moves or general thoughts, email Sam at [emailprotected].

MONDAY … Federal Reserve Gov. Michael Barr speaks about small business lending at the Aspen Institute at 3:10 p.m.

TUESDAY … Fed Gov. Adriana Kugler speaks at the U.S. Hispanic Chamber of Commerce’s legislative summit at 8:40 a.m. … The House Financial Services Committee holds a hearing at 10 a.m. on expanding access to capital… The Senate Finance Committee holds a hearing at 10:10 a.m. on the nomination of Fiserv CEO Frank Bisignano to be commissioner of the Social Security Administration.

WEDNESDAY … The House Financial Services Committee’s subcommittee on financial institutions holds a hearing at 10 a.m. on “a new era for the CFPB.” Witnesses include Logix Federal Credit CEO Ana Fonseca, Hudson Cook partner Rebecca E. Kuehn; Consumer Bankers Association general counsel David Pommerehn; Manatt, Phelps & Phillips partner Bryan A. Schneider; and former CFPB general counsel Seth Frotman.

THURSDAY … The Senate Banking Committee holds a hearing at 10 a.m. on the nominations of Paul Atkins to lead the SEC; Jonathan Gould to be Comptroller of the Currency; and Luke Pettit, to be Treasury’s assistant secretary for financial institutions.

FRIDAY … The Fed’s Barr speaks on banking policy at the University of North Carolina School of Law’s 2025 Banking Institute at 12:15 p.m.

A new X-date forecast: The U.S. is most likely to default on its $36 trillion national debt sometime between mid-July and early October if Congress doesn’t act, according to the Bipartisan Policy Center’s latest estimate that’s being released this morning.

As POLITICO’s Jennifer Scholtes reports, the new forecast from the nonpartisan think tank is expected to influence the strategy of Republican leaders, who are trying to decide whether to increase the debt limit in their behemoth party-line package or to begin bipartisan negotiations with Democrats.

Treasury’s Bessent has told lawmakers he plans to release in the first half of May his agency’s official projection of when the federal government will run out of cash to pay its bills. That estimate will take into account government receipts from this year’s tax filing season. More immediately, on Wednesday, the Congressional Budget Office plans to release its own debt limit forecast.

GOP legislative agenda in limbo: Republican lawmakers return to Washington today under fierce pressure to show meaningful progress toward delivering on their legislative agenda, which is getting bogged down in a House vs. Senate squabble over tactics.

POLITICO’s Jordain Carney and Meredith Lee Hill have a preview of what to expect on Capitol Hill this week as GOP lawmakers grapple with how to pass their top tax, energy, defense and border priorities.

First in MM – Warren questions Atkins: Sen. Elizabeth Warren (D-Mass.) is outlining her concerns with Paul Atkins, Trump’s nominee to lead the SEC, detailing a lengthy list of questions about his Wall Street ties, prior work at the agency, and how he plans to navigate the White House’s push to rein in federal agencies, Declan Harty reports.

In a 34-page letter ahead of his confirmation hearing this week, Warren said she has “serious concerns” about whether Atkins would be able to avoid conflicts of interest as chair. And she criticized his time as a commissioner in the run-up to the 2008 financial crisis, a period during which he often spoke in favor of lighter-touch regulations.

Warren also peppered the former SEC commissioner with dozens of questions about his record at the agency and as an adviser to financial and cryptocurrency firms.

"[You] have significant potential conflicts of interest through your work on behalf of corporate interests—and a long record of advocating for weaker protections for investors and weaker rules to prevent wrongdoing by giant corporations,” Warren wrote. “This record raises questions about your judgment and your ability to serve as an effective SEC Chair if you are confirmed.”

SEC employees take buyouts — Declan Harty reports: Hundreds of SEC staffers have agreed to voluntarily leave the agency, according to three people familiar with the matter, an exodus that stands to substantially shrink the ranks of the top Wall Street regulator.

Through a mix of different programs, including the SEC’s recently offered $50,000 buyout, more than 10 percent of the agency’s roughly 5,000-person staff is expected to leave in the coming weeks and months, said the people, who were granted anonymity to discuss the private information.

SBA shakeup: The Trump administration announced on Friday it’s pursuing a reorganization of the Small Business Agency that will reduce the agency’s workforce by 43 percent, Ali Bianco reports.

Meanwhile, as Mackenzie Wilkes reports, Trump said he plans to transfer management of the federal government’s $1.6 trillion portfolio of student debt from the Education Department to SBA.

IRS nears deal with ICE – The Trump administration is close to finalizing a plan that would allow the Internal Revenue Service to share confidential tax data with federal immigration officials as a way to confirm the names and addresses of people suspected of being in the country illegally, according to The Washington Post. The Post, citing several sources familiar with the matter, said the potential agreement caps “weeks of negotiations over using the tax system to support President Donald Trump’s mass deportation campaign.”

DOGE vs. the D.C. economy: “Political leaders across the Washington region are scrambling to find a place for government workers President Donald Trump is trying to fire, part of a mad dash to protect the region’s economy that relies on serving the federal workforce,” POLITICO’s Danny Nguyen and Ali Bianco report.

“Officials from the District of Columbia, Maryland and Virginia have been mobilizing their resources to build a safety net, trying to offer fired federal workers positions elsewhere. Websites sprawling with links on everything from filing for unemployment to postings for local jobs have gone up for all the major counties in the area, and officials are trying to hire as many former federal officials as they can in state and local government.”

• Mark McQuillan @mcqdc
• Victoria Guida @vtg2
• Declan Harty @declanharty
• Katy O'Donnell @katyodonnell_
• Sam Sutton @samjsutton
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• Michael Stratford @mstratford
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