Senators Decry Watering Down Corporate Transparency Act

U.S. Senators Sheldon Whitehouse (D-RI) and Charles Grassley (R-IA) submitted formal opposition to a recent Interim Final Rule issued by the Financial Crimes Enforcement Network (FinCEN), which exempts domestic companies from beneficial ownership reporting under the Corporate Transparency Act (CTA).

In a joint letter sent to Treasury Secretary Scott Bessent on May 27, the Senators criticized the rule as “inconsistent with the text and original policy goals of the CTA.” The rule, titled Beneficial Ownership Information Reporting Requirement Revision and Deadline Extension, was published on March 26, 2025, and is pending finalization later this year.

The CTA, enacted with bipartisan support, mandates that certain entities disclose beneficial ownership information (BOI) to FinCEN to combat money laundering, terrorism financing, and other illicit finance risks. Prior to the Interim Final Rule, both domestic and foreign reporting companies were subject to the BOI reporting mandate, unless explicitly exempted under one of 23 categories.

FinCEN’s Interim Final Rule significantly narrows the scope of the CTA. Under the new rule, domestic entities are categorically exempt from filing BOI reports. Only non-exempt foreign reporting companies are required to report, and even then, only for non-U.S. beneficial owners.

Whitehouse and Grassley argued this change contravenes Congress’s clear legislative intent. They cited statutory text and legislative history affirming that the law was designed to include domestic companies. The Senators also emphasized national security implications, noting that anonymous domestic shell entities have long been used to conceal illicit financial activity.

Their letter states, “The decision to categorically exempt all U.S. persons and domestic entities from the CTA’s beneficial ownership information reporting requirements is inconsistent with the text and original policy goals of the CTA.”

Opponents of the transparency measure range from President Trump to the National Cattlemen’s Beef Association, which argued the law could subject non-compliant small firms and ranchers to civil or criminal penalties, even for inadvertent omissions.  

FinCEN is expected to finalize the rule later this year.

Sen. Whithouse Press Release [link]

Sen. Grassley Comment Letter [Link]