A Win for Dark Money

The Treasury Department’s decision to end ownership-reporting requirements for U.S. businesses and destroy the database of ownership information has been touted as a deregulatory measure, lifting burdens from business owners. However, this move is little more than a gift to financial crooks, allowing them to store and launder dark money in U.S. financial institutions with greater ease.

Destroying the database removes a crucial tool for tracking crooks and their ill-gotten gains. Financial institutions must now verify customer data themselves, leading to increased costs and risks. Shady business owners will be able to exploit this new reality by opening accounts with imperfect information, increasing their chances of getting away with deception.

The number of enterprises required to report their true ownership is set to plummet from 32.6 million to a mere 11,667. This reduction is no coincidence; it’s a deliberate effort by the Trump administration to create a safe haven for financial crooks.

The Corporate Transparency Act, enacted in 2020, aimed to bring transparency to corporate finance by authorizing the Treasury to establish a database of ownership information. This made it easier for law enforcement and financial institutions to track suspicious activity. However, now that database is gone, and with it, a critical tool for preventing money laundering and other forms of financial crime.

The consequences of this decision will be far-reaching. Financial institutions must spend millions more on compliance and risk management, passing the costs onto consumers in the form of higher fees and interest rates. Meanwhile, tax evaders, drug traffickers, and money launderers have a freer rein to operate undetected.

Aaron Klein, an expert in banking regulation at Brookings Institution, noted that this move is “payback for those who tried to enforce the law against Donald Trump.” This clear indication of the administration’s willingness to undermine anti-money-laundering laws to protect its own interests undermines efforts to prevent financial crimes.

The Treasury Department’s actions are a slap in the face to Congress, which has worked tirelessly to prevent terrorists and other criminals from using the U.S. financial system. The 9/11 terror attacks led to significant reforms aimed at preventing money laundering and terrorist financing. However, now those efforts are being undone by the very administration that claims to be committed to fighting crime.

The Financial Accountability and Corporate Transparency Coalition estimates that this decision will have a devastating impact on law enforcement’s ability to track financial crimes. The number of suspicious activity reports filed with the Treasury Department is likely to plummet, making it even harder for authorities to detect and prosecute financial crimes.

This move also highlights the administration’s willingness to use anti-money-laundering laws for its own purposes. For example, the administration has required notice of remittances to Mexico of as little as $200, while allowing its associates to keep anonymous bank accounts.

The Treasury Department’s decision is a stark reminder that the line between legitimate business and illicit financial activity is increasingly blurred. As long as the Trump administration remains in power, one can expect further erosion of anti-money-laundering laws and a safe haven for financial crooks.

The consequences of this decision will be felt far beyond the world of finance. It’s a threat to national security, as well as the integrity of our economic system. Congress must take bold action to reverse this decision and restore transparency to corporate finance. Anything less would be a betrayal of the public trust.