U.S. Sen. Elizabeth Warren (D-MA), Senate Banking, Housing and Urban Affairs Committee ranking member, and U.S. Rep. Maxine Waters (D-CA), House Financial Services Committee ranking member, recently sent a letter to Treasury Secretary Scott Bessent regarding the Treasury’s decision to ignore the bipartisan Corporate Transparency Act (CTA).
The act requires many small-business owners to file corporate transparency reports with beneficial ownership information. It was designed to combat illicit activity such as tax fraud, money laundering, and financing for terrorism.
“Your decision to gut the law has caused growing alarm among law enforcement, inspectors general looking to fight fraud in U.S. government programs, and experts across the political spectrum that you are making it easier for criminals to take advantage of the financial system,” the lawmakers said. “Treasury has taken this approach despite ample unclassified evidence that criminals and foreign adversaries use shell companies or opaque corporate structures in the United States. This includes Sinaloa cartel operatives, Iranian sanctions evaders, and those stealing technology for China’s military.”
The Financial Action Task Force, the Government Accountability Office, and the National Narcotic Officers’ Associations’ Coalition have issued warnings that failing to address shell companies will help fraudsters steal taxpayer funds from U.S. federal government programs and allow drug cartels to profit from selling fentanyl.