Did Trump make tax fraud and money laundering legal with this new financial rule?

Starting a new business is considered extremely hard.

It requires lots of risk, demands, and requirements. When the government repeals a law so it seems like it is cutting through red tape, that is usually a positive thing for business owners.

But what if removing that safeguard makes it easier for fraudsters and invites white-collar crime?

Cutting the tape

The Treasury Department has officially repealed a rule forcing American businesses to report true owners to federal authorities. The original law was called the Corporate Transparency Act and passed with bipartisan support.

Under these changes, U.S. business owners no longer need to submit personal ownership details. Foreign firms get a break, too. They no longer must report Americans who helped them register locally.

Treasury Secretary Scott Bessent praised the move. “President Trump promised to cut red tape, and this final rule delivers,” Bessent claimed, calling it ‘a victory for common sense’ for small businesses.

But repealing the original rule comes with heavy criticism. The reason the bill was so popular back in 2021 was that it required all new businesses created to report who actually owns those companies. This was designed to make it harder to commit fraud and money laundering by using a business that only exists on paper.

Money laundering gift

Critics quickly raised the alarm. Senator Elizabeth Warren blasted the repeal and called it a “gift to cartels, criminals, and U.S. adversaries that exploit shell companies to move millions” through banks.

Warren pointed directly to Secretary of State Marco Rubio. She noted he championed the law as a senator, calling it “the most significant anti-corruption & money laundering law in decades.”

A State Department spokesperson defended the decision to The Hill. The spokesperson stated the agency supports “fulfilling President Trump’s promise to cut red tape for American businesses and rightsizing the rule to place the burden on foreign companies.”

License to defraud

Nonetheless, the reason the Democrats are so furious with this decision is that they believe the Trump administration’s promise of no more red tape for businesses is actually more beneficial to criminals who use corporations to launder money or commit tax fraud.

The U.S. Government Accountability Office, a non-partisan agency, previously warned that exempting corporations and limited liability companies posed clear financial risks.

Trump’s Treasury apparently disagreed with those concerns.

This article is made and published by Daniel Wolfram, who may have used AI in the preparation