The Trump Regime Just Made it Easier to Hide Money

The Justice Department won't enforce strong rules to prevent bad actors from hiding money from law enforcement and tax authorities.

Last week, Donald Trump’s Treasury Department announced that it would “permanently remove the requirement for U.S. companies and U.S. persons to report beneficial ownership information” and that it would delete all such information filed with the U.S. government in the past.

That all sounds pretty technical. It’s actually one of the most corrupt and lawless decisions the Trump administration has made to this point.

(TanyaJoy/iStock)

Let me explain why.

The United States has strong rules to prevent bad actors from using banks to hide money from law enforcement and from tax authorities. But until recently, we were one of the easiest places in the world to establish a shell company — that is, a company that exists only on paper, with no physical office, conducting no business, useful only for holding or transferring assets, and, often, for hiding the identity of its owners. For this reason, the Tax Justice Network ranked the United States in 2024 as the world’s biggest enabler of financial secrecy.

Imagine you were a Russian oligarch or South American drug lord looking for a safe and legal way to store and spend your ill-gotten gains. Again, until recently, you could get an American lawyer or accountant to create a shell company for you, and then register it in the name of some random person in a state like Delaware (which had one of the most permissive corporate registration laws in America). For good measure, that first shell company could then register multiple other shell company subsidiaries, creating a complex network of fake companies that would be almost impossible to trace back to you.

Those companies could then open bank accounts — in their name, not in yours — in countries with weak anti-money laundering rules, like the Cayman Islands or Panama. You could then spend the money however you want, anonymously.

For example, you could buy a condo in Trump Tower without your name appearing in any public records (no joke — an investigation in 2017 found that one third of Trump’s Florida condos were owned by limited liability companies with the ability to shield the identity of their owners.) You could even make unlimited contributions to dark money groups influencing American elections, even though foreigners are not legally allowed to do so. Or you could do more mundane things, like avoid paying taxes or hide your wealth from an ex-spouse.

To fix this, as a member of Congress I helped pass a law in 2020 called the Corporate Transparency Act. It required every company registered in the United States to report its true owner or owners to the Treasury Department. The list of these “beneficial owners” would not be made public, but it would be available to law enforcement authorities investigating crimes, whether drug, arms, human trafficking, or tax and sanctions evasion. Knowing this, the bad guys would be less likely to hide their wealth under our noses.

The Corporate Transparency Act enjoyed bipartisan support. Rep. Mike Waltz, now Trump’s ambassador to the United Nations, cosponsored an amendment that speeded its enactment. One of its biggest champions was Sen. Marco Rubio. On December 9, 2020, Rubio boasted: “My ‘Corporate Transparency Act,’ the most significant anti-corruption & money laundering law in decades & which forces anonymous shell companies to disclose their true owners is going to pass as part of the end of year defense bill.”

The law did not actually take effect until 2024, when the Treasury Department issued its implementing rules. From that point, there were complaints from American businesses about having to submit their beneficial ownership paperwork, which some conservative Republicans started to echo. I think the reporting process was easy — the form could be submitted and asked only for the names and addresses of company owners along with an image of their driver’s licenses or passports. But I can understand how some small mom-and-pop businesses might have been confused. There were legitimate concerns about Treasury’s application of the law to entities like co-op associations and tiny trusts formed by seniors to manage their estates.

These types of concerns often arise when laws are implemented. The Trump administration could have addressed them by issuing new rules or by asking Congress to make small fixes.

But that’s not what it did. The administration decided to just stop enforcing the law altogether and to destroy all of the company ownership data collected thus far. (The Treasury Department’s announcement said that it would only stop collecting beneficial ownership info from “American persons” and “American companies.” But this is misleading. If a foreign criminal creates a shell company in the U.S., that shell company is legally an “American person.”) That database contains evidence of serious crimes. Law enforcement authorities will no longer be able to use it.

Why would the Trump administration do this? The answer seems obvious. The president of the United States is a convicted white-collar criminal. He’s done business with white-collar criminals. All his life, he’s resented and fought government agencies that collect information about his business activities.

Trump’s IRS has sharply reduced audits of wealthy Americans and of large corporations, and virtually stopped making criminal referrals for tax fraud. His Treasury Department has narrowed enforcement of the law that prohibits Americans from bribing foreign officials. His Justice Department is deprioritizing prosecution of corporate crime. I guess telling the world’s crooks and kleptocrats that they’re welcome in America again is the next logical step. And hey, if he can do it in a way that lets them buy his crypto coins more anonymously, all the better.

The small problem he faces is that, well, Congress passed a law requiring collection of beneficial ownership information. I know this sounds quaint, but presidents can’t ignore laws! See this document for more details. So, this issue will likely end up in court. I imagine state attorneys general would have standing to sue because the law gave state prosecutors access to Treasury’s beneficial ownership data to investigate crimes. Deleting the data would materially impede their ability to protect people from those crimes.

Meanwhile, Democrats just got another issue to run on in the midterm elections — Trump is helping billionaire tax cheats and the world’s worst criminals hide their money. And the next Congress will have another item on its clean up corruption to do list.

Tom Malinowski is a former member of Congress from New Jersey who was an assistant secretary of state in the Obama administration.

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