Shortly after Donald Trump’s defeat in 2020, Congress tried to pass something called the Corporate Transparency Act, which enjoyed bipartisan support. It wasn’t easy to advance the legislation — members included it in a defense package, which the lame-duck Republican president vetoed — but lawmakers ultimately overrode Trump’s objection and passed the law on their own.

Then-Sen. Marco Rubio took a victory lap at the time, boasting that the law he helped to write and champion would go after “anonymous shell corporations,” which are “often used for money laundering, sex trafficking and terror.” The Florida Republican called it the “most significant anti-corruption and money laundering law in decades.”

The assessment was entirely fair: The proposal, which Democratic members also had a hand in creating, was designed to create more transparency for shell companies, exposing more of their ownership structures to law enforcement agencies.

Nearly six years after the bipartisan reform became law, Rubio’s colleagues in the Trump administration announced that it would no longer collect relevant data about the ownership of private American companies, despite the Corporate Transparency Act’s reporting requirements. The New York Times reported:

The Trump administration is moving forward with a plan to scale back scrutiny of the shadowy shell companies that criminals use to launder money and traffic drugs. The initiative follows a yearslong campaign by lobbying groups, which contended that new financial reporting requirements were too onerous for businesses. […]

The law applied to a broad swath of private American businesses; however, there has been particular concern in the United States about shell companies. These are legal entities that do not usually have physical operations or assets and can be used for holding — and often hiding — financial assets in anonymous accounts.

The administration made no real effort to deny any of this. In fact, Treasury Secretary Scott Bessent practically crowed in a written statement that he and his colleagues were simply “eliminating a burdensome reporting requirement.”

Part of the problem here is the apparent power grab. The Treasury Department appears to have announced that it no longer intends to enforce a federal law, which is up to Congress to change.

But the other part of the problem is who will benefit from the administration’s decision.

As Democratic Sen. Elizabeth Warren of Massachusetts, the ranking member on the Senate Banking Committee, told the Times, “This is a gift to cartels, criminals and U.S. adversaries that exploit shell companies to move millions through our financial system. The Trump administration has dismissed law enforcement warnings, ignored the role that shell companies play in crimes ranging from drug trafficking to fraud to sanctions evasion.”

Former Democratic Rep. Tom Malinowski of New Jersey, who also helped to write the Corporate Transparency Act six years ago, issued a related statement in which he argued that the Republican administration’s move is going to “help criminals,” which he characterized as “utterly crazy.”

Malinowski added, “Why is the Trump administration doing this? I don’t know. But it’s certainly good news for rich Russians who want to buy his condos, or Gulf royals buying his fake crypto.”

It’s a safe bet the Treasury Department’s move will be tested in the courts, but the next time the president insists he and his team are tough on crime, be sure to keep this in mind.

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