The Treasury Department recently eliminated a rule that required American companies to identify their owners. The rule was intended to prevent money laundering. What’s driving the decision to drop it?

Guests

Gabe Lezra, senior policy strategist and counsel at Democracy Defenders Action.

Gary Kalman, executive director of Transparency International U.S. – a nonpartisan, nonprofit that focuses on combating corruption.

Also Featured

Casey Michel, investigative journalist and author of “The United States of Oligarchy.”

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Transcript of Full Broadcast

The version of our broadcast available at the top of this page and via podcast apps is a condensed version of the full show. You can listen to the full, unedited broadcast here:

Part I

MEGHNA CHAKRABARTI: If you go to the FBI’s website right now and dig around a little bit, you’ll find a 2024 video of Kelly Smith, FBI ASAC. That’s Assistant Special Agent in Charge. Smith served in the Bureau’s Seattle office, and in this video, he describes why the FBI’s anti-corruption investigations are so important.

KELLY SMITH: That’s the program that looks at corruption within government, and that’s federal, state, or local government. There’s really nothing more offensive than someone who’s been entrusted by the public with public funds who uses that for personal gain, and so that’s a top priority for the FBI.

CHAKRABARTI: And that is true.

Corruption is a toxin that poisons the public’s trust and drains the public’s treasury. So I wonder how Kelly would have felt knowing that the FBI’s Seattle division itself, the division where he served, was paying rent in its own headquarters to one of the world’s most corrupt leaders.

This is a small story about large-scale corruption, about how money starts dirty and gets washed clean through the American financial system. It begins in the threatened forest of Borneo, and traces its way through multiple shell companies and corrupt business deals, and lands finally at an address, 1110 3rd Avenue in Seattle, the Abraham Lincoln building, which houses the FBI’s Seattle Division headquarters.

Okay, so let’s start in Borneo, the world’s third-largest island. It is home to some of the world’s oldest rainforests, and has long been famed for its spectacular biodiversity. But since the 1960s, industrial deforestation has razed the jungle there. In the 1980s and ’90s, Borneo’s forests were leveled at a rate unprecedented in human history.

This is a clip from a 2015 BBC documentary, and in it you’ll hear the devastation wrought on the indigenous Penan tribe that lives in Malaysia’s Sarawak State in northwestern Borneo.

BBC DOCUMENTARY: Over the past 40 years, logging has spread deep into Sarawak’s primary forest. Once the canopy is removed, a dense, impenetrable secondary forest quickly takes over.

Throughout their territory, there’s a crisscross of old roads where nothing has grown for decades.

CHAKRABARTI: For decades. Now, over most of the most recent 40-year period, Sarawak State was ruled by one man, Chief Minister Abdul Taib Mahmud. He died in 2024, but before that, he sold off Sarawak’s forests at an astonishing rate.

Some environmental advocates claim that barely 5% of the state’s primary rainforest has been left untouched. Through a series of corrupt connections, nested shell companies, and barely hidden kickbacks, Mahmud turned himself and his family into multi-billionaires. In 2013, the international advocacy group Global Witness published an investigation revealing exactly how Chief Minister Mahmud’s scheme worked.

Global Witness’s undercover operatives posed as potential buyers for thousands of acres of pristine Sarawak forest, and they first met with the lawyer of one of Borneo’s most powerful tycoons, and you’ll hear this in this video. He laughs about his big and well-connected family.

(CLIP PLAYS)

CHAKRABARTI: Okay, so the lawyer is saying there that in order for the sale to go through, the Sarawak government would have to issue a license, and Chief Minister Mahmud would grant it, but only if he was paid a percentage upfront.

LAWYER: What kind of percentage are we looking for?  I think I know —

MAHMUD: 10%. He is selling for 230 billion. Upfront, everything.

CHAKRABARTI: Okay, it’s hard to hear in that tape, because it is undercover tape, but Chief Minister Mahmud, the lawyer says, expects 10%, a kickback of 10% up front on a sale price of $230 million.

A cool $23 million just to grant one license. Okay, so you can imagine that over the years, Mahmud made his family billions of dollars, which they hid in shell companies in more than two dozen countries around the world. The activities didn’t go unnoticed. Mahmud was under investigation by Malaysia’s own anti-corruption office.

The Australian government started looking into things, and as far back as 2006, even the U.S. government knew something was up. In October 2006, Political Section Chief Mark D. Clark sent a confidential cable from the U.S. Embassy in Malaysia to the State Department. It read, quote, “The Sarawak State Government remains highly corrupt and firmly in the hands of its chief minister.

The $82 million state assembly building now under construction serves as perhaps the most obvious and extreme example of the self-enrichment of the state’s chief minister.” End quote. So where did Taib Mahmud and his family put all that money? They put a lot of it in U.S. real estate, and that brings us to the FBI’s field office in Seattle, the Abraham Lincoln Building, 1110 3rd Avenue.

It happened to be owned by a company called Saki International. Saki had several shell companies beneath it, one of which was called Wallysons, which, as you can now guess, Wallysons owned 1110 3rd Avenue in Seattle, which meant that therefore, the United States taxpayer, via the Federal Bureau of Investigation, was paying the rent in one of America’s most expensive cities to one of Asia’s most corrupt leaders, who was responsible for pillaging the forests of Borneo for his own personal gain.

And this was all allowed because of the American financial system. So I wanna bring Gabe Lezra into the conversation now. He’s a policy and advocacy director at State Democracy Defenders Action. That is a bipartisan group that advocates for the rule of law and against corruption. Gabe, welcome to On Point.

GABE LEZRA: Happy to be here. Thanks for having me.

CHAKRABARTI: You’ve been looking at corruption and the financial system in the United States for a long time. What do you take from this one tiny example of a Malaysian chief minister buying real estate in Seattle, Washington? It is a very common scheme for international corrupt actors to move money and use their money and make their money work for the United States.

It’s not at all surprising to me that this happened. And it is certainly continuing to happen as we speak right now.

CHAKRABARTI: But here’s the thing. The reason why I love this story is all of this predates a really important moment in American financial history that was just happened five years ago, and you were involved in this moment because Congress actually passed a law within which there was a simple rule that was designed to stop this kind of money laundering, right?

LEZRA: That’s right. It’s called the Corporate Transparency Act, and essentially what the bill did was create a requirement that every, most U.S. corporations had to report to the federal government, the ultimate beneficial owner of their corporation. So basically everyone who had a corporation simply had to tell the government who the human being at the top of that corporate chain who benefited from the money and from those corporations was.

It’s actually a very simple concept.

CHAKRABARTI: I love how elegant it is in its simplicity. Every time I think about this issue, I keep thinking, this is exactly what you want government to do, right? To find clear, concrete, simple solutions that actually have large positive impact. So let’s disentangle this for a minute or two, Gabe.

So back in 2020, Congress passed, as you said, the Corporate Transparency Act, and inside of that, there was this new rule that was finally released by the Financial Crimes Enforcement Network, or FinCEN. Okay, and this rule said you had to fill out a form. Whether you were representing an LLC or an S corp or anything, you just had to fill out a form that says, “At the end of the day, here are the human beings who own this company.”

What impact did that have, Gabe?

LEZRA: Unfortunately, we never actually got to use the registry because we pushed it back, the implementing date back a couple of years. And then as soon as the Trump administration took over, they began to make noises about rolling it back, and then ultimately, they did issue a rule that, as you all know, had just came into force in August that actually just essentially demolished the entire thing.

So it would have been a revolution in the way that we follow and protect our country from dirty money as it moves into and around the country. Unfortunately, we are back to square one right now.

CHAKRABARTI: Okay. So you just laid it on why we’re doing this hour today. So this simple idea of, hey, anyone who owns a U.S.-based company, I keep saying LLC because that’s my favorite example, but LLCs, S corps, whatever.

You just have to tell us who you are. Simply put, who you are. Because the idea is if we know who you are and you’re doing illegal activities through your company, maybe the United States government wants to know about it and do something about it. Now, people actually had to fill out this, a beneficiary ownership information form for a little while.

I had to actually do it myself not that long ago. But you’re saying that the registry that we were supposed to build up of this information, this ownership information was never actually, was it never fully constructed or what?

LEZRA: So we actually did collect about 6 million entries into the registry of real people who own real corporations.

So the registry was well on its way to being finalized, but what ended up happening is that when they rolled back all of that information that we collected, they actually are going to delete it. And part of the reason that this happened was that we did push back the implementing date, so we never actually got that information fully from all 32 million businesses.

And good corporate citizens like yourself did fill this out, but others, I think, were banking on some sort of delay. And ultimately, we never got to use the information. Law enforcement never looked at it. We never ended up verifying anything. It was devastating.

Part II

CHAKRABARTI: Okay, Gabe, before we talk about that BOI form in more detail in just a second, can you give us a little bit of a big picture in terms of, again, before 2020 and before the initial announcement of the first rule? What kind of role did the United States financial and corporate system play in both domestic and international money laundering?

LEZRA: So we are now, and have been for many years, either the worst or the second-worst jurisdiction in the entire world for corporate secrets. As we have begun to see, mostly through leaks like the Panama Papers, the Pandora Papers, the center of a kind of cascading financial and corruption disaster.

And as other countries develop their registries, more money has flowed into the United States. We’re talking about billions and billions of dollars. And as we began to see that more and more, we decided that it was time to address it. But we are, I think it’s fair to say, the center of dirty money in the entire world.

Everyone talks about the Caymans; everyone talks about Cyprus and these other places. Wyoming is a bigger destination than those two places.

CHAKRABARTI: Wow. And I have to say, this is one of those unfortunate outcomes of what I also think is a strength of the American financial and corporate system, which is, in order to assist businesses, it’s easy to stand up a business in this country, right?

To help small business if we don’t want to really get in the way of that. And by the way, folks, when I said earlier that I had filled out this FinCEN form for beneficiary ownership information, I don’t want you to think that I’m, like, some kind of corporate titan. Literally, I’m like one of millions of Americans, so I actually was lucky enough to inherit one piece of rental property from my parents, so it’s literally my mom and pop’s rental property, which I inherited. But I still, I built, I started an LLC in five seconds, and had to fill out this form. This happened a couple of years ago. Okay, everyone hold that example in your mind for a moment. But Gabe, let me just play a piece of tape here.

This is another voice who’s describing the importance of the U.S. financial and corporate system to dirty money worldwide. So this is from April of 2024. And the Senate Caucus on International Narcotics Controlled held a hearing to talk about U.S. shell companies and international crime. And Erica Hanichak, governmental affairs director with the Financial Accountability and Corporate Transparency Coalition, talked about the role of shell companies in opioid markets.

ERICA HANICHAK: These aren’t crimes of passion, these are crimes of profit, and the best place that we can actually tackle the problem of drug traffickers is to go after their pocketbook. And so it truly is the role of many of these enablers to facilitate drug traffickers and other bad actors in bringing their money into global financial centers, including the United States.

I’m thinking of one example in particular from Texas that I was going through Department of Justice press releases recently, and he was found guilty in 2020 of laundering nearly $500,000 a month on the behalf of a narcotics ring, particular on opioid trafficking. And in a conversation with an undercover agent, he said of his lawyer, one of the dealers said of the lawyer, “He’s a thug. He just got a law degree.”

CHAKRABARTI: So Gabe, here’s another example that under the FinCEN rule, which has now been obliterated, that this Texas-based guy, in filling out the beneficiary ownership information form, would have ultimately had to put the name of what? The narco guys who were paying him to start the company?

LEZRA: Yeah, theoretically. Obviously, people will lie, and if you’re in a business like that, you will probably lie, but it would be a very serious crime to do so. That is another element of the Corporate Transparency Act, right? You don’t just say you have to fill out this form. You say, “Okay, if you don’t fill it out, seriously you have to go to jail,” because otherwise people will just lie.

CHAKRABARTI: So you helped shape the Corporate Transparency Act as a whole or the specific BOI rule?

LEZRA: I worked on this law while it was being developed in its current form. Okay. But then also was more involved in the regulatory process.

CHAKRABARTI: Got it. So let me ask you, when discussions were happening on Capitol Hill that, hey, there is actually quite a simple, clean way to do a lot to shut down money laundering in the United States, and it just involves a form that takes less than 10 minutes to fill out.

What was the response on Capitol Hill?

LEZRA: You’d be surprised. It was actually, maybe not, but there was opposition to essentially any new form, anything that’s new that the federal government tries to collect out of businesses, there’s always going to be a huge level of opposition. But the coalition supporting the bill also included some strange bedfellows, everyone from anti-corruption organizations like mine, all the way to sheriff and organizations representing law enforcement officers and to international community people like the folks who represent the Ukrainian diaspora and try to track Russian oligarch money, right?

So it was a very broad coalition, which is one of the reasons we ultimately got it passed.

CHAKRABARTI: Okay. So the Treasury, when it made this announcement that it’s rolling back this reporting rule, I’m looking right at the press release from August 11th. Basically, Treasury Secretary Bessent is quoted as saying, “The Treasury is eliminating a burdensome reporting requirement for millions of law-abiding business owners without compromising our national security.”

So red tape and burdensome. Gabe, I have to say that the BOI reporting website has disappeared. The live website has disappeared from the web, but thank goodness for the Internet Archive. We dug it up, so you can still find what it used to look like, and I have it right here in front of me. And I have to say, how many minutes do you think it actually takes out on average, takes to fill out this Beneficial Ownership Information report, Gabe?

LEZRA: So we know very clearly how long it takes. Because we actually, one of the reasons that we designed it this way was because we wanted it to be very simple, and it takes about 20 minutes. That’s what our analysis was, at most. And that is the vast majority of the companies in the United States, that’s how long it would have taken, 20 minutes.

CHAKRABARTI: So you basically say what type of filing is it? It’s your first ever or it’s an updated one, looking at it here. Then you hit next, and there’s this part that says, “Do you need help? What kind of business are you? What’s your business’s legal name? What is its alternate name?

What kind of identification are you gonna provide, like your company’s EIN, for example? What jurisdiction are you in?” These are things I think most business owners would kinda know. The address off the top of your hat. Okay. Then it says, “Who is making the application? Legal name and date of birth, address,” blah, blah, blah.

Okay, nothing we haven’t filled out before a million times. Beneficial owner FinCEN ID, could that trip up people?

LEZRA: No, not really. These are all very common, like, common things that you would know.

CHAKRABARTI: Yeah. No, I’m, like, literally clicking through it right now, and I’m done clicking through it because it just asks for the ownership information. There’s nothing more to talk about.

LEZRA: Precisely. Yeah, and what you just saw there was if, 20 minutes is generous. You could probably do this in five if you have a good sense of your business’ address and stuff.

CHAKRABARTI: If you know your business’ address. Okay. But the Trump administration says this was burdensome, and even a violation of sort of business owner privacy and that we don’t wanna put those onerous requirements on American small business here.

LEZRA: Yeah, and look, obviously that’s a massive overstatement.

This is an incredibly simple form that is asking you for very simple information. And I’ll also note that, when it comes to privacy, we actually designed the system so that it was very private, right? The only people who had access to these records were federal law enforcement officials.

Banks couldn’t even get it without your consent. State officials in various cases had to get a warrant to get it. We put huge numbers of blocks in the system to prevent this information from being released. And even incorrectly releasing the information, it was a federal, became a federal crime under the CTA.

CHAKRABARTI: Okay. So Gabe, hang on here for just a second because I want to bring Gary Kalman into the conversation. He’s the executive director at Transparency International U.S. It’s a nonpartisan group that focuses on combating corruption, and he also runs the U.S. chapter of Transparency International.

That’s in 110, has 110 chapters around the world. Gary, welcome back to On Point.

GARY KALMAN: Thank you, Meghna. Thank you for having me.

CHAKRABARTI: Okay, I keep coming back to this, and listeners, please forgive me, but I cannot get past the idea, just the truth, that this was a really simple idea. Just getting on paper, or on the e-form of paper, who actually owns a company, whether they’re an international person or even any small, medium, large business owner of a politician in the United States.

It’s a simple idea. But let me ask you, Gabe says we could not know how effective it was in fighting corruption and fighting money laundering because the BOI information was never allowed to be used by law enforcement. It didn’t live long enough. But how effective do you think it might have been, Gary?

KALMAN: I think it would be enormously effective, and I think we also have evidence from other countries that implemented similar laws. In the UK and in the EU, they have beneficial ownership information collection systems, and it’s helped them enormously with their anti-money laundering rules and laws and enforcement.

I think we also have some test cases here. There’s a little-known rule called Geographic Targeting Orders, and that was set up to collect this information on real estate purchases prior to the CTA coming into effect. And in that instance, Treasury found and FinCEN found that they were enormously helpful.

Not necessarily as you all noted, criminals don’t put their name on the form, but somebody who’s connected to the criminal, and that’s the thread. That is the link that they could use to actually follow the money. We always tell law enforcement to follow the money, and yet we set these roadblocks up.

This removed that roadblock and is enormously effective.

CHAKRABARTI: Okay, so let me go back to what Treasury says. Treasury says it’s eliminating the requirement for foreign companies to report a U.S. person who helped the foreign companies register in the United States. Thoughts?

KALMAN: Yeah, it is bizarre that the administration says, “We want to crack down on drug cartels.

We want to crack down on sanctions evasion. We want to crack down on a lot of crimes in which the key benefit of these crimes is to access illicit cash.” And so they say we’re going to exempt everybody in the United States because the threat’s really foreign.” All right we have dozens and dozens, if not hundreds, of examples of U.S. companies using anonymous companies to launder money.

But even then, as you just noticed, foreign companies with U.S. owners, and so if somebody’s connected to a drug cartel in Latin America or China or what have you, they too are exempt. And so they’ve undermined even their own rationale for identifying risk.

CHAKRABARTI: So Gabe, let me turn back to you because thus far we have been focusing a lot on international dirty money being laundered through the United States.

But I have to say that the Treasury says under its new final rule, foreign entities that are reporting companies, if someone internationally hires another company outside the United States to create the U.S. company, sorry listeners, if this gets a little confusing, but those foreign companies will still be required to report who they’re working for.

Is that a good enough stopgap, Gabe?

LEZRA: Obviously not.

CHAKRABARTI: I’m just, I’m asking for the sake of asking.

LEZRA: No. No, I’m not criticizing. No, what I meant is if you look at the total numbers here, the registry was originally designed for the 32 million U.S. companies that I mentioned. This will now apply to about 20,000, maybe more, a little bit.

And that’s about one tenth of 1% of the information that we would’ve originally obtained.

CHAKRABARTI: Wow. Okay. Now, the thing is, I again, I started by using international examples, but Gary, the registry, the beneficial ownership registry would have also applied to domestic money laundering, domestic corruption, right?

It should come as a surprise to no one that you don’t even have to leave the United States to find people who are using the U.S. financial system to clean their money or hide it. Even in politics, right? After Citizens United in 2010 that eliminated corporate spending limits these kind of shell companies became the perfect tool for very rich people to hide how they were bankrolling U.S. politicians.

Now, ostensibly, the registry would have actually been, would have made it less easy to hide, Gary?

KALMAN: Some and some. Okay. There’s a variety of vehicles that are used to move money through politics. There were certain exemptions for certain nonprofit entities because they have other reporting requirements, so it gets a little complicated.

But the notion that, I think where you started, is exactly right. The notion that a U.S. company is not going to be used for laundering money and the threat is only foreign companies, let me say two quick things. One is we talked to some corporate attorneys that looked at who would actually be required to report, and I think Gabe used the figure 20,000 out of the 30-plus million companies.

We actually think it’s closer to 10,000. They said literally the way in which the new rule is structured, anyone who registers a company using that, it’s probably a mistake. So nobody’s using that structure is the first thing. The second thing is they exempted companies even if you have foreign ownership, and so let me give you an example.

When we were in Afghanistan, the Department of Defense contracted with U.S. companies that had service provision in Afghanistan, and they were providing services to the troops. It turns out that U.S.-based company was secretly owned by people who are affiliated with the Taliban. We were literally giving money to people who were buying guns and bullets to shoot at our troops.

So the notion that somehow they’re getting at the threat is wrong. And the final thing I’ll say, even U.S. people operating U.S. companies, most people are good people, right? I imagine the vast majority of the 30 million people are good people, but Medicare, fraud and other scams are based in the U.S. and we have dozens of examples of that.

Part III

CHAKRABARTI: Gabe, I keep mentioning the Trump administration because this rollback has happened obviously under the second Trump administration, but I understand that in Congress more broadly, there is quite a focused push to repeal if, I hope that’s not too strong of a word, to repeal the Corporate Transparency Act as a whole.

Is that right?

KALMAN: Yeah, that’s right. There is, ever since basically we passed the CTA, there have been people who wanted to repeal the law entirely. And it’s important to remember that the law actually still is in effect. This is good law on the books, and that’s why they’re trying to repeal it, because a rule can always be rolled back with another rule, as we just saw.

And Gary, tell me more. What do you think about that? Yeah, there’s a fairly serious effort in the House to try and repeal it. However, because, as Gabe had mentioned, the coalition supporting the law is amongst the most diverse coalitions that I’ve ever seen in my over 20 years in Washington.

You’re talking about law enforcement and the NAACP. You’re talking about major polluters and large multinational corporations, as well as Friends of the Earth banks and consumer groups. It is a very, for various different reasons, this has really touched a nerve in so many different constituencies.

And so they are not going to be able to do it as far as we can tell. It did pass out of a House committee that looked at the bill, but even in that committee, there was bipartisan opposition to the repeal effort. So we think we’re going to be okay, but there are opponents for whom this is going to cost a lot of money, and they’re trying to get rid of it.

CHAKRABARTI: Both of you have mentioned very correctly law enforcement’s long frustrations in trying to fight financial crimes when they can’t even know who owns U.S.-based or U.S.-registered companies. So let’s listen to Elaine Dezenski, senior director and head of the Center on Economic and Financial Power.

She’s at the Foundation for Defense of Democracies. She testified before Congress in 2024 and talked about the importance of law enforcement having access to beneficial ownership information.

I think part of the challenge for law enforcement is that it just takes too long to get to the bottom of these financial transactions and following the money has just been too difficult and too time-consuming, and the resources have to go somewhere, and they may go more towards the interdiction than spending the time.

So this reinforces why the beneficial ownership information is so critical and why the information sharing across law enforcement, also at the state and local level, becomes absolutely essential to solving these cases quickly and allowing for better interdiction sooner in the investigation process.

CHAKRABARTI: Gabe, did you want to add anything to that? Because I think this is a part of the issue that we actually haven’t focused on enough.

LEZRA: Yeah, just a little bit. It’s not just that it’s hard. I think that she mentioned that it’s time-consuming, and time is literally money.

We’ve seen these stories of oligarchs stashing money through these complex structures in, for instance, like I said, Wyoming. And this can take four, five, six more years to untangle and actually figure out where the money is going. There’s a very famous example of a Russian oligarch owning a mega yacht and it actually took the government even though he was sanctioned about five years to figure out how to obtain that yacht and then move it out of his control.

CHAKRABARTI: So help me understand how the Beneficiary Ownership Information Registry would’ve made that process shorter.

LEZRA: So it would’ve done two things. First of all, it would’ve been upfront. It would’ve, like Gary said, allowed the government to see that there was someone who is tied to this person who is owning the corporation that owns the yacht.

And then on the back end, it again would’ve allowed the government to find that person very easily by a quick search in the registry. These are the types of pretty simple, like I said, minor changes that would’ve made a huge difference for law enforcement.

CHAKRABARTI: Okay. At the risk of sounding both repetitive and just dumb, I just, man, I just don’t get it.

I really don’t get it. This is a simple rule. It is not onerous to businesses. You have to go through 20 minutes of pain once a year. But actually … No, go ahead, Gary.

KALMAN: Not even once a year. … Let me give you a quick example. My dad owned a small business, and like over 80% of these 30-plus million businesses in America, it was a single person firm.

So there’s no question about who owns and controls it. It was just my dad. He also, in his, the 25 years that he ran the business, we never moved. We lived in our house that I grew up in. So he would’ve, had this law been in place when he was in business, he would’ve one year gone on, put in his name, his address, his phone number, and his driver’s license number.

He doesn’t have a FinCEN Number. Not everybody gets one. You don’t, if you don’t know it, then it means you don’t have it. So there’s just … and that’s it. So it would’ve taken him 10 minutes or whatever it is for the entire life of his business.

CHAKRABARTI: Oh, no, go ahead, Gary.

I didn’t mean to interrupt you. Go ahead.

KALMAN: No, the, so I think that this burden issue has really gotten blown out of proportion. In fact, the last thing I will say on this is we have not done a complete scan of every rule in the entire federal government, but I would challenge anyone to find a rule that is less burdensome on a business than the corporate transparency.

CHAKRABARTI: This is what I’m getting at, exactly this. This is why I feel like this is a dumb question. I just don’t get why this one rule the Trump administration went out of its way to undo. Now, I desperately wish members of the administration would speak to us. They don’t, because I know that’s a question for them.

But Gary, again, since you’ve been in this world for so long, do you hazard to guess why a simple, effective rule that would both, you know, make the United States less a haven for corruption and money laundering and would also assist law enforcement is something that Treasury has just decided to do away with?

KALMAN: Yeah, I think that there are some very wealthy, powerful individuals some of which are doing illegal things and some of which are not. But they would prefer to not have that political activity known. And so for example, if there was beneficial ownership information that came out a lot of folks that use legally tax loopholes in the IRS code to move money offshore and get their tax rates down to practically nothing, it is embarrassing.

It could create a tax justice movement that could change laws. So you have a sort of … I don’t think it is the Sinaloa cartel that’s hiring lobbyists to go and try and repeal this law. I think that it is folks that are more likely, two things. One is they’re more likely doing legal activity they would prefer nobody actually knows, and so this is a way of protecting themselves, or people that are commingling with some seedy characters.

Look it took a very long time to go after the CEO of Binance, which is the crypto company. He was laundering money for drug cartels and other illicit actors. It took a long time to find that because we didn’t have sort of the ability to figure out who he was moving money for because we didn’t know the beneficial owners of the companies who owned the wallets, et cetera, et cetera.

And that person is a good friend of political elites in this country, including the President of the United States. So we have certain, I would argue, wealthy individuals that have a vested interest in making sure this information is not anywhere in a federal database.

CHAKRABARTI: Okay, so let’s just get one more voice in here.

This is Casey Michel, who is author of the recent book, The United States of Oligarchy, and Casey says the scope of how he thinks that this undoing of the rule is gonna damage the United States can be seen in what he says the Trump administration has already done to undo completed work.

CASEY MICHEL: To have the administration announce that it is not only going to stop enforcing these regulations, but actually destroy all of the data that they had already collected on something like 15 million companies in the United States, was devastating.

And a massive step backwards. And so even a future administration would no longer be able to just come in and be able to identify who’s behind those companies themselves. So yeah, it wasn’t just that they were no longer enforcing, it’s also that they are destroying all of the data that the United States of America had already gathered.

CHAKRABARTI: And Casey says he’s also not surprised given President Donald Trump’s own personal use of shell companies and the less-than-flattering things the president has said about the Corporate Transparency Act. But he says that he’s worried the move to eliminate beneficiary ownership, or beneficial ownership information, will have an impact on American politics.

Take, for example, he says, the case of the company called American Ethane.

MICHEL: Doesn’t get much more of an American-sounding name than that. And it’s not just a company that’s registered and exists in the United States, it’s also a company that has donated significant amounts of funds to American politicians, including some of those who are still in Congress.

The reason that I wrote about this company is because a few years ago, the FEC in one of its few investigations, actually decided to look into this very American-sounding company, which had, again, donated to American politicians, and they realized it was secretly being controlled by a number of Russian oligarchs.

The number of Russian oligarchs, including many who are now sanctioned, had secretly been controlling this American company that had been, in turn, using some of those funds to donate to American politicians. So again, in terms of highlighting the threats and the concerns and the realities of foreign actors, including out of Russia, using American companies, including American shell companies, to get money into American politics, this is really the kind of perfect example.

And he also says that given that, it could reduce the power of everyday Americans at the ballot box. This is going to accelerate all of the trends we’ve already seen over the last few years not only in terms of accelerating wealth inequality writ large in the United States, but accelerating the reality that American politics, especially federal politics in Washington, seem open and available only for that wealthiest class of donors, those that can take advantage of these kind of financial secrecy tools, those that have the wealth and the resources to use to give to whichever politician they want.

CHAKRABARTI: So that’s Casey Michel, author of The United States of Oligarchy. So Gabe, let me turn back to you here. Barring some kind of a regulatory resuscitation of the BOI registry, is there anything that can be done, say, at the state level? I know this might be extremely Pollyanna-ish, but can we imagine a world where Delaware, South Dakota, and Wyoming say, if you want to create a company in our states, maybe you need to give us ownership information?

LEZRA: We could imagine a world where they would say that, but they profit so much from being havens for secret money that it doesn’t seem very likely. They’re raking in money when people move their assets into their states. But remember, corporations are creatures of state law, so any state can require information upfront from someone who wants to create a state in their country.

The federal government, while it would be ideal that they would just resuscitate the law, and I think they will eventually, states like New York or California or whoever can actually require this information be given to them and create their own sort of mini registries.

CHAKRABARTI: Gary, I’m gonna give you the last word here, but just again, this is one of those it’s so simple, I can hardly believe it.

But just to recap, in 2020, the Corporate Transparency Act was passed, and within it there was an idea or a new requirement to create this Beneficial Ownership Information Registry, which simply said, “If you have a U.S.-based company, we have,” we being the people of the United States via the federal government, “have to know who the actual human beings are who own that company or LLC,” whatever.

That rule finally came into effect in 2024, and last month, the Trump administration eliminated that rule, opening the door, as both of you say, to a return to a world of massive money laundering and corruption in this country. There’s a minute left now, less than a minute left, Gary. Your final thoughts here.

Are we rolling back that far?

KALMAN: I believe that the rollback is extremely serious, and I think it’s going to undermine several of the priorities that I think the country may actually agree on. Sanctions evasion, Iran uses anonymous shell companies to plant money in the United States.

Imagine that. The safest place on the planet for them to evade our sanctions is by hiding money in the United States. So I am hopeful, let me end on this, that a future administration is going to reinstate a strong rule as long as we preserve the law, and I believe we can do that. So I’m hopeful for the future.

I am not hopeful for the next couple of years.

This article was originally published on WBUR.org.