The U.S. Treasury Department announced on Sunday that it will not enforce the Corporate Transparency Act, which requires millions of business entities to disclose the identities of their real beneficial owners.
The law, part of the Biden administration’s efforts to increase financial transparency, has faced resistance from the Trump administration, which argued that it imposed unnecessary burdens on low-risk entities. It has also been the subject of repeated legal challenges.
In a statement, the Treasury Department clarified that it would not enforce penalties under the act against U.S. citizens or domestic reporting companies. “Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses,” the department said. It also noted plans to issue new rules that would limit the scope of the law to foreign reporting companies.
Supporters of the Corporate Transparency Act argue that it is crucial to combat the rising use of the U.S. as a destination for laundering illicit funds.
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