Close up of dollar bill with capitol building and the words we trust (via Getty Images)
The U.S. Congress may soon vote on whether to repeal the Corporate Transparency Act (CTA), the 2021 anti-money-laundering law that requires American companies to disclose to federal investigators who actually owns and controls them. On April 21, the House Financial Services Committee voted to advance a bill to repeal the Act by a single vote, 26–25. Members weighing the bill on the floor will hear that the law is too costly, that it has proved ineffective, and that it is unconstitutional. Each of those claims has been widely repeated, including in a recent Washington Post editorial urging repeal. None of these assertions survive examination.
A Law Built on Bipartisan Consensus
The CTA was enacted with broad bipartisan support in 2021 and was a major step forward in the United States’ fight against money laundering, drug and human trafficking, financial support for terrorism, and other forms of organized crime. Its central innovation is simple: for the first time, American companies must inform the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) the real names, addresses, and government ID numbers for each person who owns more than 25 percent of the company or who exercises substantial control over the company. This information, which is not publicly disclosed, helps law enforcement agencies trace illicit funds and prevent criminals from making use of so-called anonymous shell companies from concealing their unlawful activities. In other words, the CTA closed a long-standing loophole: until 2021, anyone could form a corporation in the United States without disclosing who actually owned or controlled it, making American shell companies a preferred vehicle for hiding the proceeds of crime.
The CTA drew support from an unusually diverse and bipartisan coalition, reflecting in part the range of harms anonymous shell companies enable. For example, drug cartels and human traffickers use shell companies to launder proceeds, often moving, as in one case, hundreds of millions of dollars to support their transnational trafficking operations. Foreign kleptocrats use them to hide stolen wealth in U.S. real estate. Sanctioned actors use them to evade enforcement, such as to hold a 36-story Manhattan office tower for the Iranian government. Thus, it is no surprise then that a broad and diverse coalition of groups supported the bill, including law enforcement organizations, prosecutors, financial institutions, human rights groups, the Conservative Political Action Conference, multiple religious denominations, environmental groups, and others. When Marco Rubio was a senator, he was a lead supporter of a prior version of the bill. And the first Trump administration formally endorsed an earlier version of legislation calling it “important progress in strengthening national security, supporting law enforcement, and clarifying regulatory requirements.”
That bipartisan support persisted as the law took effect. In March 2023, Senators Sheldon Whitehouse, Chuck Grassley, Ron Wyden, Rubio, and Elizabeth Warren co-signed a letter to FinCEN criticizing the agency’s proposed access rules for “stray[ing] from congressional intent” by erecting “unnecessary and costly barriers” to the directory’s use. The signatories across the political spectrum pushed not for less enforcement of the CTA, but for more.
The Campaign Against the CTA
But the CTA has always had its detractors, particularly among corporate service providers who profit from creating anonymous, no-questions-asked shell companies; the businesses that bear the CTA’s compliance costs; and those ideologically opposed to private sector regulation. Opponents of the CTA are now pressing on two fronts, one legal and one political.
In court, the National Small Business Association filed a lawsuit in 2022 alleging that Congress had no constitutional authority to enact the CTA’s reporting rule. A federal district court in Alabama agreed and blocked the government from enforcing the law against the plaintiffs. However, on Dec. 16, 2025, a unanimous panel of the Eleventh Circuit Court of Appeals reversed the lower court’s decision, finding in an opinion written by Judge Andrew Brasher, a Trump appointee, that the CTA is well within Congress’s power to regulate interstate commerce, which is the same authority Congress has long used to require disclosures from banks, political committees, and lobbyists. The challengers have since petitioned the Supreme Court to hear the case but, as of this writing, the Court has not said whether it will take the case.
On the political front, the consensus that produced the CTA has fractured under sustained pressure from trade associations and corporate-services providers, and an organized legal campaign to recast the law as federal overreach. Opponents of the CTA have lobbied aggressively to convince the Trump administration and Congress that the CTA is an expensive and ineffective regulatory overreach. Although the first Trump administration was initially supportive of the CTA, the second Trump administration changed course in March 2025, suspending enforcement of the CTA’s reporting requirements for U.S. citizens and domestic firms, though retaining them (for now) for foreign-owned entities. In January 2025, Senator Tommy Tuberville (R-AL) introduced a repeal bill, and in April 2025, Representative Warren Davidson (R-OH) submitted the companion bill in the House. Despite the original strong bipartisan support for the CTA, the House bill to repeal the law now has 191 co-sponsors, and on April 21, the House Financial Services Committee voted to advance the bill to the full House.
The Case for Repeal – And Why it Fails
None of the developments described above appear to have been prompted by new evidence about the CTA’s merits. Instead, the case for repeal rests on the same three claims detractors have relied on from the start: that the CTA is too costly, that it has proved ineffective, and that it is unconstitutional. The Washington Post’s recent editorial urging passage of the repeal bill is the most prominent statement of that case; it is also a reversal from the same board’s 2021 endorsement of the law as a way to “strip shell companies of their cover.” Whatever explains the Post’s change of position, the arguments it advances fall apart under scrutiny.
The Compliance Cost Argument
First, the Post claims that the CTA imposes $1 billion in compliance costs each year. The source for this $1 billion estimate is a “backgrounder” on the bill published by the Heritage Foundation in 2019, two years before the CTA came into effect. Heritage’s calculation works as follows: the author assumed 11 million U.S. small businesses would be covered, that each would need an hour to file at $50 per hour, and arrived at $550 million in annual compliance costs. The author then asserts, without further calculation, that “more realistic” assumptions about compliance time, hourly rates, and the use of outside counsel and litigation would push the figure “over $1 billion annually, and perhaps many billions of dollars each year.” That second figure, the one the Post repeats, is not the product of any specific computation. It is the original $550 million estimate roughly doubled, based on an unquantified adjustment for lawyers and lawsuits. The Post cites this figure as authoritative. It is, at most, an extrapolation from a base estimate that itself rested on speculative assumptions.
Even on Heritage’s own numbers, the per-firm cost is modest. The “$1 billion” figure sounds large because there are a lot of small businesses in the United States but the total filing cost works out to under $100 per firm, an order of magnitude less than what most firms spend each year to prepare and file their tax returns. And unlike taxes, CTA reports don’t need to be filed every year: after the first filing, a company does not need to file again unless ownership changes. The per-year compliance cost for most small businesses, which tend to have fairly stable ownership, is likely to be near-trivial when properly averaged over time. Indeed, an October 2024 poll by a Republican firm whose clients have included the Trump campaign found that more than 80 percent of small business owners surveyed considered 20 minutes of paperwork a reasonable cost for helping prevent drug trafficking, terrorist financing, and financial crimes.
The Post makes two supplemental arguments to support the claim that the CTA is overly burdensome. First, it points to the 122 questions addressed in FinCEN’s CTA FAQ as evidence the law is too complicated. But the number of FAQ entries is a poor proxy for legal complexity. Most of FinCEN’s FAQs address routine procedural questions — who must file, when, and how to update a filing — not genuine ambiguities in the statute. By the Post’s logic, the IRS, which publishes far more guidance on far more questions, would be evidence that the tax code is unworkable rather than that the agency is doing its job. Second, the Post claims that the Act’s definition of “substantial control” is too murky — suggesting, for example, that if a firm has 10 owners, it might be the case that all 10 of them should be reported as owners. But FinCEN’s guidance provides a specific framework for answering this question. And the hypothetical itself doesn’t carry the weight the Post gives it. Reporting 10 beneficial owners means typing four data points — name, date of birth, address, ID — into a single form. And the information is not public; it goes into a FinCEN database accessible only to law enforcement and certain regulators.
It’s also worth noting that other critics of the CTA (though not the Post editorial) have suggested that the law exposes small business owners to severe criminal penalties. Senator Tuberville, for example, published an opinion piece in April 2024 titled, “The Corporate Transparency Act Means Jail Time for Small Business Owners.” But that’s misleading hyperbole. The penalties for deliberately filing one’s beneficial ownership paperwork incorrectly are the same penalties as one faces for deliberately filing any federal document, such as one’s tax returns, incorrectly. In extreme cases, wilful misrepresentation, done to conceal unlawful activity, might trigger criminal penalties, but inadvertent, even careless misfiling would not land someone in jail.
The Effectiveness Argument
Second, the Post asserts that the CTA has proved ineffective. That would be a serious problem if true, even given the modest compliance costs. There is not (yet) hard quantitative data on the Act’s efficacy and such data would be inherently difficult to obtain, given that it would require measuring how much illicit activity did not occur as a result of the Act’s reporting requirements and, in any event, the Trump administration suspended enforcement against domestic firms in March 2025, before the database had been fully integrated into law enforcement workflows. But the claims that the Act has proved “unworkable” are unsupported and almost certainly false, with the available evidence cutting the other way.
For starters, it’s useful to remember that the push for the CTA came largely from law enforcement bodies and groups (including not only FinCEN but also the Fraternal Order of Police and the National District Attorneys Association), who have emphasized that they are often forced to abandon cases when criminal actors hide behind anonymous companies. Their consistent view is that ownership transparency is a core investigative tool. Without it, investigators must expend significant time and resources to identify the true owners behind financial activity, diverting attention from other cases and weakening enforcement overall. The CTA was a response to a widely recognized structural gap in U.S. law enforcement’s ability to “follow the money.” Their position has not changed. There is no evidence that law enforcement agencies believe the CTA has been or would be ineffective, those opposing repeal of the CTA include the National District Attorney’s Association, the National Narcotic Officers’ Associations’ Coalition, and the Fraternal Order of Police.
Deference to law enforcement is not always warranted, but the breadth of consensus in that community that the CTA is a useful tool means repeal advocates should have to produce strong evidence of unworkability before abandoning it. The Post offers essentially none. Its sole argument on ineffectiveness is that “the law is ineffective because it adds a new reporting requirement to stop behavior that is already illegal. The businesses that would abide by the Corporate Transparency Act already follow the law, while criminals would ignore or get around it.” On that logic, every disclosure obligation or other regulatory requirement intended to make crime more difficult is ineffective and ought to be repealed. And it is far easier to prove that a business has failed to file its CTA report, or that it has filed a false CTA report, than to prove the underlying offense. Some criminals will find other ways to launder money. But, with the CTA in place and enforceable, the cost of doing so will be higher.
The Constitutional Argument
Third, the Post editorial uncritically accepts the claim that the CTA is unconstitutional. One district court judge in Alabama has credited that argument, so it cannot be dismissed as frivolous. But it is a weak one, as the Eleventh Circuit made clear in its reversal of that lower court ruling. In its unanimous opinion, the Eleventh Circuit observed that under the Commerce Clause, Congress has the authority to regulate conduct that, taken in the aggregate, has a substantial effect on interstate commerce. The court noted that federal reporting requirements of this kind are routine. For instance, banks, political committees, and registered lobbyists are all subject to similar disclosure obligations under longstanding federal law. “Apart from its scope,” the court observed, “the CTA is a routine federal law.” The CTA, the court explained, does not regulate the incorporation process itself (which is, at least arguably, an intra-state activity), but rather imposes on the covered entities an obligation to report their ownership as a condition of engaging in commercial activity—which is, in virtually all cases. The Post engages with none of this analysis, instead dismissing the appellate court as “a more national-security-minded” panel.
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The Trump administration is taking steps to impair the CTA’s promise in the fight against money laundering, trafficking, and terrorism. Its March 2025 decision to suspend enforcement against domestic entities was bad enough. In September 2025, the Treasury Department announced it would seek to delete the beneficial ownership information on domestic companies that it had already collected. The head of the U.S. chapter of Transparency International warned that destroying the data “with no idea if those records hold potential links to corrupt or criminal activity” would undermine the administration’s own stated priority of shutting down cartels and transnational criminal organizations.
As with any complex regulatory regime, aspects of the CTA and its implementation could be refined. But the bill before the House is not a refinement. It is a full repeal and a return to the regime that prevailed before 2021, in which anyone could form an American shell company without disclosing who owned it. That is the regime drug cartels, human traffickers, and foreign kleptocrats relied on for decades. It is the regime federal and state law enforcement asked Congress to end. And it is a regime out of step with more than 100 other jurisdictions — including the European Union and the United Kingdom — that have already launched the kind of beneficial-ownership registries the Financial Action Task Force, the international body that sets anti-money laundering and countering terrorism finance standards, called for in 2022. Repeal advocates have not explained why American small business owners are uniquely incapable of meeting an obligation their counterparts across the developed world routinely fulfill.
The arguments now offered for striking down this law, and the editorials advancing them read as though they were ghostwritten by industry lobbyists. A vote to repeal the CTA would discard, at considerable cost to U.S. law enforcement and national security, a tool before it has been put to use.
– Dani Schulkin, Jodi Vittori, Matthew Stephenson, Published courtesy of Just Security
