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On March 2, the U.S. Treasury announced that it no longer intends to enforce major components of one of the most significant U.S. anti-money laundering laws, the Corporate Transparency Act. We should all be concerned by this dangerous move. 

The law, which passed in 2021, was heralded as “groundbreaking” and represented a “hard fought victory” against anonymous shell companies often used to launder money, evade sanctions, finance terrorism, cheat on taxes, and commit acts of corruption.

The law drew strong bipartisan support from Congress and was endorsed by diverse constituencies including law enforcement, the financial sector, fair business groups, human rights advocates, labor unions, and environmental organizations. 

The law drew strong bipartisan support from Congress and was endorsed by diverse constituencies".

The law is surprisingly simple. It requires companies doing business in the United States to provide basic information about their ownership, including their owners’ names, addresses, and IDs.

The requirements are so common sense that many people are surprised that they did not exist previously. The information is then stored in a secure government database, where it can be accessed by law enforcement during the course of investigations.

For most businesses, the registration process takes 20 minutes. Because more companies are registered in the United States than in any other jurisdiction in the world, the policy benefited both U.S. and international efforts to combat illicit finance.

The Corporate Transparency Act, the product of more than a decade of deliberate, bipartisan Congressional work, was effectively gutted via several tweets and one Truth Social post over the course of the past weekend.

According to the U.S. Treasury Department, the law will now only be enforced for foreign persons or companies doing business in the U.S. This clearly subverts Congress’ intent and means that 99.8 percent of the 36 million companies that were supposed to be covered by the law are now exempt. 

The law will now only be enforced for foreign persons or companies doing business in the U.S.".

Many people in the United States associate the new Administration, and its Department of Government Efficiency ("DOGE") in particular, with a willingness to “move fast and break things”. This saying implies that in the rush to get important things done, small mistakes happen along the way, whether it’s firing people we actually need or accidentally gutting a law that’s helping keep the U.S. safe. 

But for those of us tracking these issues more closely, a different picture emerges. Regrettably, the recent move by the Treasury is part of a larger pattern that we have been witnessing since the start of this new Administration.

These are not isolated mistakes along the way, but rather, a pattern of assault on U.S. laws and institutions designed to combat illicit finance, curtail corruption, and hold corporations accountable.

In February, the Trump Administration announced that it will pause enforcement of the Foreign Corrupt Practices Act, which has been one of the most significant pieces of anti-corruption law in the United States for the past 40 years. Meanwhile, the Trump Justice Department has disbanded counter-kleptocracy units and has deprioritized white-collar crime investigations.

The move appears to undermine the Administration's own objectives to combat transnational drug trafficking – a $500 billion illicit market that relies heavily on white collar criminals at almost every stage of the supply chain. 

Following this move, the Trump Administration announced plans to cut an estimated 90 percent of USAID programming, a significant blow to anti-corruption efforts globally. In fiscal year 2022, the United States provided $252 million to counter corruption globally, much of it through USAID. 

The Trump Administration announced plans to cut an estimated 90 percent of USAID programming".

In March, meanwhile, the Administration announced plans to lay off as many as half of the staff of the Internal Revenue Service (IRS), the U.S. tax authority. News reports suggest that the IRS is already calling off tax audits of the wealthy, which can take up significant time due to their financial complexity, because of insufficient staffing.

The Administration’s plans to offer a $5 million golden passport also raises concerns. As anti-corruption groups have noted, “selling U.S. citizenship to the highest bidder will attract corrupt actors seeking safe haven for themselves and their dirty money." 

U.S. efforts to combat dirty money – while far from perfect – responded to real threats that impact average American citizens. This year, for example, U.S. prosecutors brought charges against a Miami resident for allegedly laundering $300 million through Florida shell companies on behalf of drug trafficking organizations including the Sinaloa Cartel.

The case serves as an important reminder of why we need laws such as the Corporate Transparency Act. The case comes at a time when over 100,000 Americans are dying each year from drug overdoses, the leading cause of death for Americans ages 18 to 45. Rolling back efforts to combat white collar crime, shell companies, and dirty money will leave American citizens less safe.

The case serves as an important reminder of why we need laws such as the Corporate Transparency Act.

Unfortunately, these changes will not impact the U.S. alone. When it comes to illicit finance, research and experience has shown that there are close connections between the U.S. and countries in the Americas: “the geographic proximity and the historical connections coupled with the size and reputation of the U.S. economy means there is a symbiotic relationship between illicit money that leaves the Latin American and Caribbean (LAC) region and the institutions, channels, and facilitators in the U.S. that provide an ecosystem to create a U.S. safe haven...” 

In this sense, the rapid and dangerous rollback of U.S. anti-money laundering laws also presents serious risks to our friends and neighbors in the Western Hemisphere.

In 2024, for example, a U.S. federal jury in Miami convicted the ​​former Comptroller General of Ecuador, Carlos Ramón Polit, of accepting $10 million in bribes from Odebrecht, the Brazilian construction firm.

According to U.S. prosecutors, Polit and his collaborators "caused proceeds of Polit’s bribery scheme to 'disappear” by using Florida companies registered in the names of friends and associates, often without the associates’ knowledge” from 2010 to 2017.

That this type of case occurred at all is a travesty. The U.S. should continue to close the loopholes that allow dirty money, including corruption proceeds from neighboring countries, to find safe haven in places like Miami and New York. Instead, by rolling back U.S. counter-kleptocracy, anti-money laundering, and anti-corruption safeguards, the current U.S. Administration is opening the floodgates. 

These problems go well beyond corruption. Research by the FACT Coalition found that among environmental crimes committed in countries in the Amazon Region over the past ten years, the U.S. was the single most common foreign destination for illicit proceeds or illegally sourced natural resources.

In a 2021 case, a Nevada LLC pleaded guilty to purchasing timber that was illegally sourced from the Loreto region of the Peruvian Amazon.

The company’s true owners declared bankruptcy and dissolved the company while it was under investigation, making it more difficult for U.S. and Peruvian authorities to hold those responsible accountable.

Unfortunately, moves by the current U.S. Administration to roll back corporate transparency requirements, re-assign top prosecutors covering environmental crimes, and de-prioritize white collar crime will make it harder to prevent, detect and prosecute these abuses going forward. 

For policymakers, journalists, and even our own colleagues within civil society,  issues around illicit finance are often seen as too technical, too niche. Better left to those more fluent in all the acronyms. But I believe that’s a terrible mistake.

The safeguards in place to keep illicit wealth – drug money, corruption proceeds, and the profits from environmental crime – at bay are being rolled back en masse. That should be of concern to all of us.