Trump administration sued over rollback of corporate ownership reporting rules

Twenty-one US states and the District of ​Columbia sued President Donald Trump's administration on Tuesday ​over its rollback of reporting requirements established ‌under ​a 2021 law aimed at combating illicit finance.

The Trump administration in August finalized a rule exempting US companies and individuals from reporting beneficial ownership information to ‌the Treasury Department's financial crimes unit, rolling back reporting requirements established under the 2021 Corporate Transparency Act. In their lawsuit, the coalition of mostly Democratic-led states asked a federal court to overturn the rule, which was part of a broader ‌push by the Trump administration to curtail anti-corruption efforts.

"The executive branch cannot repeal a law by rulemaking. That ‌fundamental principle resolves this case," said the lawsuit filed in the US District Court for the District of Oregon. The lawsuit said that the Trump administration effectively gutted the 2021 law by exempting more than 99.9% of companies originally required to disclose information about their ⁠owners.

The ​suit was filed against ⁠US Treasury Secretary Scott Bessent, the Department of the Treasury and its anti-money laundering Financial Crimes Enforcement Network. The Treasury Department did not respond ⁠to a request for comment.

Bessent had cast the rule when it was made in August as "eliminating a burdensome reporting ​requirement for millions of law-abiding business owners without compromising our national security." The lawsuit also listed the heads of ⁠the US Departments of Justice and Homeland Security as defendants.

"The Trump administration has effectively overturned this law by enacting a rule that ⁠exempts ​all domestic companies and US owners of foreign companies from the law's requirements, allowing the true owners of both foreign and domestic shell companies to remain anonymous," New York Attorney General Letitia James, who was among ⁠the more than 20 state attorneys general who filed the challenge, said in a statement. US Senator Elizabeth Warren ⁠of Massachusetts, the top Democrat ⁠on the Senate Banking, Housing and Urban Affairs Committee, said in August that rolling back the reporting requirements increased the risks of sanctions evasion, fraud and drug trafficking, ‌as well as ‌sex trafficking and organized criminal activity.