Original article by Eleanor Rose republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

The White House’s latest move doesn’t just encourage financial crime in the US – it encourages the acceptance of it everywhere else

Another week, another startling development from Donald Trump’s White House. On Sunday, the US Treasury said it will halt enforcement of the Corporate Transparency Act (CTA), a federal law that requires certain companies to declare their owners’ identities.

Scott Bessent, secretary of the Treasury, described the move as “a victory for common sense” that would “unleash American prosperity by reining in burdensome regulations”.

Unleashing prosperity is a nice goal, but the White House’s chosen method will come as a bombshell for anyone who believes in transparency or accountability – both in the US and around the world.

Knowing who owns a company isn’t just a matter of corporate admin. It can serve as a vital tool against dictatorships, which build their power on global networks of financial secrecy. It’s key to tackling money-laundering and fraud. Trump’s actions pull the rug out from international efforts to reveal this hidden world. Autocrats and major criminals around the world will be celebrating.

The CTA was a key plank in Biden’s plans to counter corruption. Passed by Congress in 2021 and brought into force in 2024, it aimed to address the fact that businesses created in the US weren’t previously obliged to disclose the names of their shareholders or the people that ultimately control them.

Speaking in 2022, Himamauli Das of the Treasury’s Financial Crimes Enforcement Network said the CTA would “play an important role in protecting American taxpayers and businesses who play by the rules”.

He added: “It has been far too easy for criminals, Russian oligarchs and other bad actors to fund their illicit activity by hiding and moving money through anonymous shell companies and other corporate structures right here in the United States.”

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Since the CTA has been in force – and despite some challenges in district courts – that sort of anonymity has been a lot harder to come by. Beneficial ownership details have had to be filed by most domestic corporations and Limited Liability Companies (though not non-profits or publicly traded companies that meet certain criteria). Non-compliance has been punishable with a maximum fine of $10,000 and up to two years in prison.

That progress has now been undone. Once a leading champion of corporate transparency, the US is now basically saying that such measures are harmful red tape.

And the news could have implications beyond US shores. The UK is currently trying to impress the need for transparency requirements on its crown dependencies and overseas territories (CDOTs). Stephen Doughty MP last week said the UK government expects overseas territories to bring in publicly accessible registers this year.

Our Enablers team has spent years reporting on how these places facilitate serious financial wrongdoing: the British Virgin Islands, for instance, have been central to arrangements that helped Roman Abramovich avoid huge amounts of UK tax, funnel half a billion dollars to a now-sanctioned oligarch and bankroll a Dutch football club in secret.

But the recent calls for transparency have not been universally popular with the CDOTs. There’s been some disagreement about what exactly it means and how it should work, as well as some outright pushback.

The BVI, for instance, has proposed a registry that would grant access to a limited amount of information and to a limited number of parties. Which means it wouldn’t be all that transparent.

It’s in situations like this where the White House’s latest move feels especially pertinent. Corruption robs ordinary taxpayers and undermines global security. And the fight for financial transparency – to stop the world’s oligarchs, organised criminals and kleptocrats from stashing their wealth – is one that urgently needs international momentum.

Not only does Trump’s intervention encourage fraudsters and money-launderers to do their business on US turf – it also sends a message of apathy towards financial crime that will be heard around the world.

Reporter: Eleanor Rose
Deputy editor: Katie Mark
Editor: Franz Wild
Fact checker: Ero Parksakoulaki
Production editor: Alex Hess

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Original article by Eleanor Rose republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.