Treasury reduces ownership reporting rules for US companies
The US Treasury has finalised a rule exempting American companies and people from reporting beneficial ownership information to its financial crimes unit. The latest ruling from the Financial Crimes Enforcement Network reduces reporting requirements that were previously under the Corporate Transparency Act, which was signed by former president Joe Biden in 2021 to battle illicit activity…
The US Treasury has finalized a rule that exempts American companies and individuals from reporting beneficial ownership information to its financial crimes unit. This decision reduces reporting requirements from the Corporate Transparency Act, which was signed by former President Joe Biden in 2021 to combat illicit activities like money laundering and terrorism financing.
Beneficial owners are those who own, control, or exercise ultimate effective control over a legal entity. While foreign companies and pooled investment vehicles are still required to report information about foreign owners, the updated rule now exempts them from reporting Americans who assisted them in registering to do business in the US.
According to a Treasury statement, FinCen has effectively repealed much of the framework without completely abolishing it. Farhad Alavi, managing partner of Akrivis Law Group, commented that these requirements were enacted due to concerns about the looseness of US corporate registration rules compared to those in other countries.
The Corporate Transparency Act took effect in 2024, and the new measure makes permanent an interim rule announced in March 2025 that temporarily suspended reporting requirements for US businesses and owners of foreign companies. Treasury considered alternative sources of information to mitigate risks posed by domestic entities during the development of the final rule.
The move aligns with broader deregulatory efforts by the Trump administration, with Treasury Secretary Scott Bessent stating that the final rule eliminates a burdensome reporting requirement for millions of law-abiding business owners without compromising national security. The decision has received mixed reactions, with the Republican-controlled US Senate banking committee praising President Trump for supporting job creators, while Democrat Senator Elizabeth Warren criticized it as a "gift to cartels, criminals, and US adversaries that exploit shell companies."
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