US States Challenge Trump Rollback of Beneficial Ownership Reporting

Attorneys general from 20 US states and the District of Columbia have sued the Trump administration over its decision to exempt US companies and individuals from beneficial ownership reporting requirements.

The lawsuit, filed on October 27 in the US District Court for the District of Oregon, aims to overturn exemptions that the coalition says effectively dismantle the 2021 Corporate Transparency Act.

The administration finalized the change in August, permanently removing reporting obligations for US companies and exempting foreign reporting companies from disclosing their US beneficial owners. Foreign reporting companies must still provide ownership information about foreign individuals.

The coalition of attorneys general argues that the exemptions remove more than 99.9% of the original coverage of the law and violate the Administrative Procedure Act as well as the US Constitution.

Congress introduced the Corporate Transparency Act in 2021 to help authorities identify companies’ultimate beneficial owners and tackle the use of shell companies to conceal illicit funds. 

Maryland Attorney General Anthony Brown said in a statement:

 Treasury Secretary Scott Bessent earlier defended the change as “eliminating a burdensome reporting requirement for millions of law-abiding business owners without compromising our national security.”

The lawsuit also challenges FinCEN’s planned deletion of ownership information previously submitted by newly exempted entities. The coalition is seeking immediate relief to prevent the records’ destruction, alongside a ruling declaring the reporting exemptions unlawful.