U.S. Treasury Halts Enforcement of Anti-Money Laundering Law for Domestic Businesses

The U.S. Treasury Department announced on Sunday that it will not enforce penalties under the Corporate Transparency Act (CTA) against U.S. citizens or domestic reporting companies. The law, which requires millions of businesses to disclose their real beneficial owners, has faced strong opposition from the Trump administration, citing concerns that it places an undue burden on low-risk entities. The CTA, enacted during the Biden administration, has also been subject to multiple legal challenges.

In a statement, the Treasury Department justified its decision by emphasizing its commitment to supporting American taxpayers and small businesses. The department also signaled its intent to narrow the scope of the law by focusing enforcement on foreign reporting companies instead. This move marks a significant shift in the application of the anti-money laundering regulation, which was originally aimed at increasing transparency in corporate ownership structures.

Supporters of the Corporate Transparency Act argue that it is essential in combating financial crimes, as the U.S. has increasingly become a preferred location for criminals to launder illicit funds. By requiring businesses to disclose their beneficial owners, the law aimed to curb the misuse of anonymous shell companies. However, with the Treasury’s latest decision, its effectiveness in tackling financial secrecy and illicit money flows may now be in question.

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