Whitehouse and Grassley were the original sponsors of the TITLE Act, the precursor to the Corporate Transparency Act
Washington, DC – Senators Sheldon Whitehouse (D-RI) and Chuck Grassley (R-IA) sent a letter today to Treasury Secretary Scott Bessent requesting an explanation for the Treasury Department’s announcement that it intends to suspend enforcement of the bipartisan Corporate Transparency Act (CTA), the 2021 law considered the most important anti-money laundering law in decades. Congress passed the CTA to clamp down on criminals and foreign enemies hiding assets from U.S. law enforcement, national security officials, and tax authorities.
The CTA was designed to play an important role in protecting national security and public safety by providing law enforcement and national security officials with the names of the true owners (“beneficial ownership information”) of U.S. corporations and other legal entities. This information facilitates the government’s efforts to combat terrorist financing, money laundering, sanctions evasion, proliferation financing, tax evasion, and other forms of illicit finance carried out through shell and front companies.
On March 2, the Treasury Department announced that it would refuse to enforce penalties or fines associated with the CTA’s beneficial ownership information reporting rule against U.S. citizens or domestic reporting companies, and would be issuing a new proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.
“We request that you provide us the legal basis for the Treasury Department’s policy decision to categorically suspend enforcement of the CTA’s reporting requirements for all U.S. citizens and domestic reporting companies. In addition, we request that you provide us with information about how you intend to satisfy the policy goals of the CTA,”wrote Whitehouse and Grassley.
The senators asked the Treasury Department to respond to the following questions by Wednesday, March 12:
- Has the Treasury Department followed or initiated the process required by the CTA to exclude an entity or class of entities from its reporting requirements?
- What steps has Treasury taken to ensure that any change in the practice or rulemaking governing [beneficial ownership information] reporting fulfills the law enforcement and national security purposes of the CTA?
“This is a matter of public and congressional accountability and ensuring that relevant policy interests underlying the CTA are satisfied. We encourage you to fully implement the CTA so that law enforcement agencies around the country have access to information necessary to prevent human trafficking, terrorist financing, border smuggling, drug distribution, and many other categories of criminal activity,”added Whitehouse and Grassley.
Whitehouse and Grassley were the original sponsors of the TITLE Act, the precursor to the Corporate Transparency Act. The CTA was the culmination of more than a decade of painstaking bipartisan congressional deliberation. The CTA passed as part of the FY2021 National Defense Authorization Act and was supported by a wide range of stakeholders, including national security experts, law enforcement, anti-corruption groups, human rights organizations, faith communities, financial institutions, real estate organizations, the U.S. Chamber of Commerce, labor unions, and the first Trump Administration.
The text of the letter is below and a PDF of the letter is availablehere.
March 10, 2025
The Honorable Scott Bessent
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Ave NW
Washington, DC 20220
RE: March 2, 2025 Corporate Transparency Act Enforcement Announcement
Dear Secretary Bessent,
We write regarding the Department of the Treasury’s March 2, 2025 announcement that Treasury intends to suspend enforcement of the bipartisan Corporate Transparency Act (“CTA”) for U.S. citizens and domestic reporting companies.[1] We wish to ensure that the terms of the CTA are followed and that its purpose is fulfilled.
The CTA,[2] part of the Anti-Money Laundering Act of 2020, was enacted into law as a piece of the National Defense Authorization Act for Fiscal Year 2021.[3] The CTA is the product of a sensitive and painstaking legislative process, that included robust input and support from the first Trump Administration,[4] and its passage represents perhaps the most important anti-money laundering reform in two decades.
“For years, experts routinely ranked anonymous shell companies—where the true, ‘beneficial’ owners are unknown—as the biggest weakness in our anti-money laundering safeguards.”[5] Drug cartels, terrorist groups, foreign adversaries, corrupt foreign officials, and many others who wish harm to Americans have used anonymous shell companies and opaque corporate structures to finance and facilitate their crimes.
The CTA directly tackled this problem by requiring Treasury’s Financial Crimes Enforcement Network (“FinCEN”) to create a national directory of beneficial owners of companies within the United States,[6] bolstering our nation’s efforts to combat “money laundering, the financing of terrorism, proliferation finance, tax evasion, human and drug trafficking, sanctions evasion, and other financial crimes.”[7]
In enacting the CTA, Congress found that reporting of Beneficial Ownership Information (“BOI”) was necessary for law enforcement and national security purposes. In particular, Congress found:
(1) more than 2,000,000 corporations and limited liability companies are being formed under the laws of the States [emphasis added] each year;
(2) most or all States [emphasis added] do not require information about the beneficial owners of the corporations, limited liability companies, or other similar entities formed under the laws of the State [emphasis added];
(3) malign actors seek to conceal their ownership of corporations, limited liability companies, or other similar entities in the United States[emphasis added] to facilitate illicit activity […] harming the national security interests of the United States and allies of the United States;
(4) money launderers and others involved in commercial activity intentionally conduct transactions through corporate structures in order to evade detection, and may layer such structures, much like Russian nesting ‘Matryoshka’ dolls, across various secretive jurisdictions such that each time an investigator obtains ownership records fora domestic [emphasis added] or foreign entity, the newly identified entity is yet another corporate entity, necessitating a repeat of the same process;
(5) Federal legislation providing for the collection of beneficial ownership information for corporations, limited liability companies, or other similar entities formed under the laws of the States[emphasis added] is needed to—(A) set a clear, Federal standard for incorporation practices; (B) protect vital Unites States national security interests; (C) protect interstate and foreign commerce; (D) better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity; and (E) bring the United States into compliance with international anti-money laundering and countering the financing of terrorism standards.[8]
In 2019, the Trump administration issued a Statement of Administration Policy (“SAP”) supporting a draft of the CTA. That SAP agreed with the importance of the goals of the CTA as well as a BOI rule:
This legislation would require corporations and limited liability companies in the United States to disclose their beneficial owners, a measure that will help prevent malign actors from leveraging anonymity to exploit these entities for criminal gain. It would also assist law enforcement in detecting and preventing illicit activity such as terrorist financing and money laundering.[9]
We acknowledge that the CTA creates a process by which the Secretary of the Treasury may exclude “an entity or a class of entities” from BOI reporting requirements so long as four conditions are met. First, the exclusion must take place through the regulatory process. Second, the exclusion must be with “the written concurrence of the Attorney General and the Secretary of Homeland Security” to account for law enforcement and national security interests. Third, the Secretary of the Treasury must determine that BOI reports of these entities “would not serve the public interest.” Fourth, the Secretary of the Treasury must determine that such reports “would not be highly useful in national security, intelligence, and law enforcement agency efforts to detect, prevent, or prosecute money laundering, the financing of terrorism, proliferation finance, serious tax fraud, or other crimes.”[10]
We request that you provide us the legal basis for the Treasury Department’s policy decision to categorically suspend enforcement of the CTA’s reporting requirements for all U.S. citizens and domestic reporting companies. In addition, we request that you provide us with information about how you intend to satisfy the policy goals of the CTA. As part of your response, please address the following questions:
- Has the Treasury Department followed or initiated the process required by the CTA to exclude an entity or class of entities from its reporting requirements?
- What steps has Treasury taken to ensure that any change in the practice or rulemaking governing BOI reporting fulfills the law enforcement and national security purposes of the CTA?
This is a matter of public and congressional accountability and ensuring that relevant policy interests underlying the CTA are satisfied. We encourage you to fully implement the CTA so that law enforcement agencies around the country have access to information necessary to prevent human trafficking, terrorist financing, border smuggling, drug distribution, and many other categories of criminal activity.
Please provide your response to our information request and questions no later than Wednesday, March 12, 2025.
