The US Treasury Department announced in early March that it would halt enforcing “any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.”
The net result: the US government will no longer require shell companies to disclose their owners and beneficiaries, allowing wealthy corporations and individuals to hide their profits from the public. The rule was part of the 2021 CTA, which required some businesses to report information on people who own or control a company, indirectly or directly, to the Department’s Financial Crimes Enforcement Network, or FinCEN.
President Trump took to Truth Social after the Treasury announcement to post, almost gloatingly, “This Biden rule has been an absolute disaster for small businesses nationwide,” Trump’s post read.
“Furthermore, the Treasury is formally finalizing an emergency regulation to suspend this rule for American businesses. The economic menace of [beneficial ownership information] reporting will soon be no more.”
Republicans had long opposed the act, claiming its requirements were too complex for SMEs. The rule on beneficial ownership was supposed to go into effect in January, but a federal court order froze enforcement of the rule. The Biden administration passed the CTA to tackle tax evasion and corporate cronyism, which the Trump administration views very differently.
Following his second inauguration on January 20, Trump has targeted financial regulation and governmental agencies seeking to limit corporate and banking power, such as the Consumer Financial Protection Bureau. In early March, the president also issued an executive order halting enforcement of the nearly half-century-old Foreign Corrupt Practices Act for at least a year, pending revised guidelines from the Department of Justice. The FCPA prohibits any person or company tied to the United States from paying money or offering gifts to foreign officials to help their business.
The Spotlight portion of today’s broadcast commences with Nigel sharing his thoughts on what the Trump administration’s actions will mean for the fight against AML and financial crime in the APAC region with Regulatory Ramblings host Ajay Shamdasani. He explains why the CTA was doomed to fail and whether to expect more enforcement against money laundering and financial crime lapses by regional governments such as China, South Korea, Japan, and Singapore.
Nigel is unequivocal in his view that compliance officers and in-house counsel at banks or multinational corporations in Asia, particularly those based in key financial hubs like Hong Kong and Singapore, should not slack off.
He also views the FCPA as a powerful legislative tool to ensure international compliance. He acknowledges that, given the current president’s transactional nature, selective extraterritorial enforcement of the anti-corruption and AML rules can be expected.
Malcolm and Oonagh then share their impressions on the Trump administration’s move to expand AML and financial crime compliance worldwide.
Oonagh notes genuine concerns amongst SMEs about how difficult it was to comply with the CTA. What this means for the global battle against financial crime and related matters such as bribery, terrorist financing, sanctions, and tax evasion remains to be seen.
Malcolm and Oonagh note that while regulation is essential, blind and excessive regulation can be counterproductive.
The conversation discusses how data points and AI might aid AML/CTF/KYC compliance. See less -
