Treasury Halts Enforcement of Business Ownership Database: A Blow to Anti-Money Laundering Efforts

The U.S. Treasury Department's recent decision to suspend enforcement of the beneficial ownership information database, created under the Corporate Transparency Act (CTA), has raised eyebrows and sparked concerns among law enforcement agencies and financial experts. The database, intended to curb the formation of shell companies and combat money laundering, is now effectively dormant, leaving a significant gap in the fight against financial crimes.

The CTA, enacted in 2021, aimed to shed light on the true owners of companies registered in the United States. It required most U.S. registered corporations, LLCs, or similar entities to report beneficial ownership information to the U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCEN). The new registry was designed to collect the names, dates of birth, addresses, and identification documents of individuals who own at least a 25 percent equity stake in the entity, or exercise substantial control over the entity.

The suspension of enforcement, announced on Sunday, March 3, 2024, comes as a result of concerns raised by small businesses and their lobbying groups. These concerns revolve around privacy, security, and the potential duplication of information with other government agencies that maintain corporate databases. The move is part of President Trump's agenda to "unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy" (Source: Fox Business, March 3, 2024).