The Treasury Department has officially scrapped the requirement for American companies to disclose their beneficial owners, a decision that reshapes corporate transparency rules and has drawn sharp reactions from both supporters and critics.
Under the finalized rule, U.S. businesses are no longer obligated to report individuals who own at least 25 percent of a company or exercise "substantial control" over its operations. Treasury Secretary Scott Bessent hailed the move as "a victory for common sense and American small businesses."
Scope of the Repeal
The department first proposed this change in March 2025, when it introduced an interim rule that limited reporting obligations to foreign entities. The final rule, set to be published in the Federal Register on Friday, goes further by eliminating the requirement for U.S. companies entirely.
In addition, Americans who previously obtained FinCEN IDs will no longer need to update or correct the information they submitted, according to a Treasury press release. The rule also exempts foreign companies from reporting U.S. individuals who helped them register to do business in the country, and it spares foreign pooled investment vehicles from disclosing the BOI of U.S. persons in control.
Background of the Original Rule
The prior reporting requirement took effect on Jan. 1, 2024, under then-Secretary Janet Yellen, pursuant to the Corporate Transparency Act, which was part of the Anti-Money Laundering Act of 2020. That legislation was folded into the fiscal 2021 National Defense Authorization Act, which passed with overwhelming bipartisan support and overrode President Trump's veto.
Notably, then-Sen. Marco Rubio, now Secretary of State, co-sponsored the 2017 version of the Corporate Transparency Act with Sen. Ron Wyden (D-Ore.). At the time, Rubio argued the measure would give law enforcement the "basic information, tools, and authorities" needed to "identify and disrupt" illicit activities. In a December 2020 post on X, he celebrated the law as "the most significant anti-corruption & money laundering law in decades."
A State Department spokesperson said the agency supports Treasury "fulfilling President Trump's promise to cut red tape for American businesses and rightsizing the rule to place the burden on foreign companies." The spokesperson also noted that foreign reporting companies are still required to report their foreign beneficial owners.
Public Reaction
FinCEN received 118 public comments between March 26 and May 28, 2025, reflecting a wide range of opinions. Some small business owners praised the proposed change, while others questioned the reversal given FinCEN's earlier emphasis on the importance of BOI data for law enforcement and national security.
Critics include Elaine Dezenski and Josh Birenbaum of the Foundation for Defense of Democracies, who argued in a five-page comment that the repeal "defies" the Corporate Transparency Act and "would deliver a profound blow to American law enforcement and national security." They warned that the BOI database would become largely useless, capturing only foreign companies not owned by U.S. persons, and concluded, "Congress closed the door to anonymous shell companies. This rule reopens it."
According to a May report from the U.S. Government Accountability Office, the new rule exempts more than 99 percent of entities from reporting.
On the other side, Todd Spencer, president of the Owner-Operator Independent Drivers Association, urged FinCEN to make the rule permanent. He argued that forcing owner-operators and independent truckers to comply with reporting was an undue burden.
The repeal aligns with broader efforts by the Trump administration to reduce regulatory burdens on domestic businesses, as seen in other moves like the cancellation of a Biden-era fast-track power line plan. However, the decision has sparked bipartisan concern in Congress, with Sens. Chuck Grassley and Ron Wyden criticizing the exemption as a blow to transparency.
As the rule takes effect, the long-term impact on law enforcement and financial oversight remains to be seen, but the debate over corporate secrecy versus regulatory relief is far from settled.
