In a significant policy shift, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) is preparing to erase beneficial ownership information already submitted by American companies. This action marks a major rollback of a key transparency measure established just years ago.
The planned data deletion, confirmed by FinCEN’s director during a congressional hearing, follows a recent rule change that exempted all domestic businesses from reporting their true owners. If finalized, only foreign-owned companies operating within the United States would remain subject to the disclosure requirement.
These changes directly undermine the Corporate Transparency Act, a bipartisan 2021 law designed to combat money laundering by ending the anonymity of shell companies. The law’s central feature was the creation of a federal ownership registry, which launched last year after considerable political and legal debate.
Transparency advocates have condemned the moves as a severe weakening of financial safeguards. Experts argue that stripping away ownership data cripples law enforcement efforts to track illicit funds.
“Beneficial ownership information is the foundation,” said Gary Kalman of Transparency International U.S. “Without it, investigations into financial crimes become useless. It’s like trying to build a house without a foundation.”
The policy reversal occurs five years after a landmark journalistic investigation, the FinCEN Files, exposed systemic failures in the global financial system. That investigation revealed how major banks facilitated the movement of illicit funds for criminal networks, highlighting the urgent need for stronger transparency rules. The public outcry that followed was instrumental in passing the Corporate Transparency Act.
The Treasury Department has defended its recent actions, stating that suspending reporting requirements for U.S. companies supports “hard-working American taxpayers and small businesses.” Treasury Secretary Scott Bessent hailed the change as “a victory for common sense.”
However, critics point to contradictory evidence. Recent FinCEN analyses have shown that domestic shell companies are actively used by international money laundering networks, including those linked to Chinese criminal organizations purchasing U.S. real estate.
“This creates a direct contradiction with the administration’s stated priorities,” said Ian Gary of the Financial Accountability and Corporate Transparency Coalition. “To tackle serious threats like drug trafficking, law enforcement needs more tools, not fewer. Destroying collected data is not only potentially unlawful but entirely counterproductive.”
While the current trajectory represents a setback for transparency initiatives, some advocates believe the broader understanding of financial crime risks has been permanently elevated. The FinCEN investigation itself is credited with galvanizing bipartisan support and increased funding for the agency tasked with following the money.
Despite the regulatory retreat, observers note that the revelations about the scale of suspicious financial activity and the role of Western banks have left a lasting impact, demonstrating the clear public interest in a more accountable system.
