WASHINGTON (AP) — The U.S. Treasury Department has made a significant decision to halt the enforcement of a rule established during the Biden administration aimed at combating money laundering and the creation of shell companies. This move, announced on a Sunday evening, indicates that the agency will not penalize companies for non-compliance with registering for the beneficial ownership information database.
The rule in question, which was put into effect under the Biden administration, required most small American businesses with less than 20 employees to disclose their business owners to the government by January 1, 2024. This initiative was designed to address concerns surrounding shell company formations and illicit financial activities, particularly given that shell companies with minimal staff are often involved in concealing illegally obtained assets.
While Treasury officials, including former Treasury Secretary Janet Yellen, asserted that the regulatory burden would be minimal – estimated at around $85 per business – and could provide valuable insights for law enforcement efforts, opposition to the rule persisted. Challenges surrounding the rule’s constitutionality and privacy implications have sparked legal disputes, culminating in a recent decision by the Treasury’s Financial Crimes and Enforcement Network to suspend enforcement actions against non-compliant businesses.
President Donald Trump lauded this development on his social media platform, criticizing the database as “outrageous and invasive” and predicting its impending demise. Business leaders, echoing concerns raised during the litigation, have highlighted privacy and security risks associated with the database, questioning its necessity in light of existing government databases that fulfill similar functions.
In response to the announcement, U.S. Secretary of the Treasury Scott Bessent emphasized the administration’s broader objective of alleviating regulatory burdens for small businesses, positioning this decision as a step toward fostering economic growth and supporting entrepreneurs. This decision represents a pivotal moment in the ongoing debate over financial transparency and regulatory requirements for small businesses, underscoring the delicate balance between security concerns and regulatory compliance in the business landscape.