EUGENE, Ore. — Attorneys general from 20 states and the District of Columbia have sued the Trump administration to restore corporate ownership reporting requirements, challenging exemptions they say removed more than 99.9% of previously covered businesses from a federal anti-money-laundering law.
The lawsuit, filed Oct. 27 in U.S. District Court in Oregon, seeks to overturn Treasury Department rules narrowing the Corporate Transparency Act and prevent the destruction of ownership records already collected. Oregon Attorney General Dan Rayfield and Illinois Attorney General Kwame Raoul are leading the coalition, according to Oregon’s Department of Justice.
Numerous media outlets noted the case puts the future of the federal beneficial ownership database back before a court.
Congress enacted the Corporate Transparency Act in 2021 to help authorities identify people behind corporate entities used to conceal illicit money. The law created a federal system for collecting information about the individuals who own or control businesses.
Rule Finalized in August
The administration finalized a rule in August exempting U.S.-created companies from reporting ownership information to Treasury’s Financial Crimes Enforcement Network, known as FinCEN. The exemptions also allow foreign companies to omit information about their U.S. owners.
The states contend those changes amount to an administrative repeal of legislation Congress adopted. “The executive branch cannot repeal a law by rulemaking,” the complaint says.
ACAMS reported that the attorneys general argue the exemptions undermine investigations of suspected tax evaders and criminal organizations by allowing funds to be hidden in accounts held by shell companies. The publication said the rule freed domestically formed limited liability companies, limited partnerships and other entities from providing identifying details about their beneficial owners.
Treasury Secretary Scott Bessent defended the rollback in August as a way to reduce costs for legitimate businesses while maintaining national security protections, Reuters reported. Treasury did not respond to Reuters’ request for comment on the lawsuit.
Additional Allegations
The coalition alleges FinCEN exceeded its statutory authority, failed to adequately justify the exemptions and did not follow required procedures. It also challenges a planned purge of ownership information for newly exempt entities, which the complaint says would occur no later than February 2027.
ABA Banking Journal reported that the attorneys general want the court to vacate the rule, preserve information already submitted and require FinCEN to resume collecting beneficial ownership reports.
The allegations have not been adjudicated. The case is State of Oregon v. Bessent, No. 6:26-cv-02359.
