Photo-Illustration: Curbed; Photos Getty Images
For the past five years, in its slow and grinding way, the federal government labored to bring some sunlight into the shadowy realm of corporate secrecy. A law passed at the end of Donald Trump’s first term, with the support of his Treasury Department and both parties in Congress, imposing new disclosure requirements on the shell companies that are often used to protect financial transactions, like property sales, behind a shield of anonymity. Republicans saw the measure, which was supported by law-enforcement agencies, as a way to crack down on the flow of financing for terrorist organizations and drug gangs; Democrats liked the idea of curtailing the ability of the global superrich to hide their wealth. The law directed limited-liability companies, trusts, and other private legal entities to identify their true owners to the Financial Crimes Enforcement Network (FinCEN), a federal agency that polices money laundering and other illegal business activity. FinCEN began the yearslong process of setting up a database of who owns what, and last year it started to collect documentation from an estimated 32 million corporate entities covered under the law. It set a final deadline for compliance: March 21, 2025.
Then it all came undone with one tweet from Elon Musk.
The federal government’s abrupt U-turn began at 3:42 p.m. on March 1, when Terrence K. Williams, a comedian and entrepreneur who sells pancake mix and has 2.2 million followers on X, tagged the platform’s owner on a post complaining that the government was “targeting conservatives and small businesses” by requiring them to file a beneficial ownership information form with FinCEN. “ELON MUSK!!! I’m begging you! Please ask President Trump to get rid of this ridiculous BOI rule that Biden created,” Williams wrote.
A few hours later, Musk replied: “I can look into it.”
The next day — a Sunday — the Treasury Department’s official X account announced that it would not enforce the deadline and that it would “narrow the scope” of its rules to cover only a tiny subset of foreign companies. “That was essentially gutting the Corporate Transparency Act by fiat,” says Ian Gary, executive director of the FACT Coalition, a group that championed the law.
The demise of the FinCEN database is just one small and particularly impulsive example of Musk’s project of demolishing the federal bureaucracy. It also appears to close a chapter in a story I began to report in 2014, starting with a cover article for New York about the ways in which the wealthy purchasers — and many shady characters besides — were using shell companies to conceal their real-estate holdings. At the time, leaks of offshore bank information had offered a glimpse of an opaque international financial network used by tax evaders, kleptocrats, and money launderers as well as many rich people who were merely publicity averse. Russian oligarchs were secretly buying up mansions in London and Miami. Chinese buyers, flush with wealth from their booming economy, were taking over Vancouver. And lots of money was ending up in Manhattan, where developers and brokers were marketing luxury condominiums to overseas investors as a brick-and-mortar equivalent of a Swiss bank account: a safe haven where they could stash their money with few disclosure requirements. A property could be purchased via an LLC, which in turn might be owned by another anonymous corporate entity, which might in turn be held by a company in the Isle of Man or the Virgin Islands. Some of the money was surely illegal, but the shell game made it impossible to trace.
Some New York developers sought to capitalize on the influx, building condominium projects that were sold to foreign investors via international brokerage networks, and sometimes selling units in blocks, sight-unseen, to investors they never met. One such building, which I wrote extensively about in my 2014 article, was the Trump Soho. Another was 20 Pine, a condo building in the Financial District, where federal prosecutors brought a forfeiture action against the ultimate owner of five units, a company associated with an allegedly corrupt Russian politician. The Russian company fought a long legal battle against the money-laundering charges before agreeing to a $5.9 million settlement in 2017. In the midst of the case, one of its lawyers, Natalia Veselnitskaya, attended a meeting at Trump Tower with campaign officials and Donald Trump Jr. that later became a central episode in Robert Mueller’s investigation into Russian interference in the 2016 election.
During Trump’s first term, congressional committees, prosecutors, and reporters focused a great deal of attention on the overseas business relationships of Trump and his advisers, some of which were also scrutinized by FinCEN. (In 2021, a former senior Treasury Department official was sentenced to six months in prison for leaking thousands of confidential FinCEN reports on former Trump-campaign manager Paul Manafort and others.) Nonetheless, Trump’s first Treasury secretary, Steven Mnuchin, backed the bipartisan effort to strengthen FinCEN’s monitoring powers by forcing corporate entities to disclose their owners. The Corporate Transparency Act was passed by Congress at the very end of Trump’s term, leaving implementation to the Biden administration.
The data collected by FinCEN was meant to be used by law enforcement and was never supposed to be available to the general public. But the law immediately ran into resistance from pro-business lobbying groups, which brought lawsuits to keep it from going into effect, alleging among other things that the disclosure rules amounted to a violation of the Fourth Amendment’s prohibition on warrantless searches. “Part of the problem was just the incredibly broad scope,” says Matthew Bisanz, a partner in the Washington, D.C., office of the law firm Mayer Brown. The law’s opponents argued that in order to chase a tiny few foreign criminals, it created an expensive burden for the millions of Americans who have incorporated LLCs for legitimate purposes. Although it carried potentially serious penalties for noncompliance, including fines and prison, it was hard to imagine that these would be enough to compel bad actors to file honest paperwork. “Money laundering is a big problem, don’t get me wrong,” Bisanz says. “It wasn’t clear how this would have helped.”
For real-estate transactions, the original focus of the transparency effort, the disclosure requirements represented more of a nuisance than a crackdown. “It never really scared off my clients,” says Sandor Krauss, a New York real-estate attorney who often handles high-dollar residential real-estate transactions. However, he said that it could still be “very annoying and cumbersome” to ask buyers who are putting millions of dollars down for an apartment to also put the names behind their LLCs. “Privacy and confidentiality is the most important factor with these family offices, and usually you’re dealing with managers, agents, and administrators and never really speaking to the ultimate beneficiary.” The laws also had an unintended impact on parties like New York City co-op board members, who appeared to qualify as beneficial owners of their buildings under the law’s definitions, which triggered filing requirements.
But the federal law did shield corporate identities from the scrutiny of the public, which was what the wealthy were most afraid of. “When it was first enacted, the concern for our clients was, ‘Okay, we don’t mind the U.S. Treasury knowing our identity, but we don’t want this to be known to the entire world,’” says Pierre Debbas, another New York real-estate attorney. For a time, it appeared that a separate state disclosure law passed by the New York legislature might create a publicly searchable ownership database for LLCs that are formed or do business here, which caused some wealthy individuals to consider reincorporating their vehicles in confidentiality-protecting states like Delaware, but ultimately Governor Kathy Hochul had the public-facing provisions stripped from the bill, and the privacy concerns mostly subsided. “I tell my clients that if you’re worried about the government knowing about your activity,” Debbas says, “then we can’t represent you.”
Now, without warning, the disclosure requirements have been lifted, and the federal government has, in effect, said it doesn’t want to know who is behind LLCs. Brokers, lawyers, and other professionals involved in real-estate transactions will still be required to file reports with FinCEN in certain circumstances that the government deems suspicious, such as an all-cash purchase. But only corporate entities formed in other countries, that are controlled by foreign nationals, will now be required to reveal their ownership to the government. New York’s companion state-disclosure rules remain on the books for now, and are scheduled to be implemented next year, but Jessica Romano, an attorney specializing in financial regulatory issues at Schulte Roth & Zabel, says that “there’s an open question” as to whether Trump’s rollback will impact the state law. It was designed to piggyback on the Corporate Transparency Act, but now that federal enforcement will be hobbled New York will have to decide whether to continue on alone in the face of opposition from the private sector. The way the state law is written, plaintiffs could argue their federal exemption applies in New York, too.
Mayer Brown estimates that going forward, only about 20,000 companies — less than one percent of the original 32 million — will still be subject to the federal disclosure requirements. Foreign investors can easily get around the rules: All they have to do is incorporate an LLC in a U.S. state and work through that. Scott Greytak, the director of advocacy at Transparency International U.S., says the revised rules create an “incredibly perverse incentive” for foreign criminals to “onshore” their activities. “We are basically now saying that the U.S. is a magnet for setting up anonymous companies that are funded by, and could be funneling, dirty money.”
Greytak says that as recently as last month, he and other advocates for the law had been cautiously optimistic that the second Trump administration would allow it to go into effect as scheduled. After all, fighting transnational criminal activities, like human trafficking and the fentanyl trade, has been a priority the president has used to justify everything from tariffs to deportations. The Department of Justice was defending the law in two appeals court cases. “Those briefs were phenomenal,” Greytak says. “It certainly seemed to happen very quickly.” On March 2, the same day the Treasury announced its hasty policy change, Trump attacked the “Biden rule” on Truth Social, calling it “outrageous and invasive” and an “economic menace” to businesses.
What motivated the sudden change of heart? The Treasury Department did not return an email requesting comment. Nor did the breakfast-food influencer Terrence Williams, whose posts about an arcane paperwork issue got the wrecking ball swinging in the first place. After the Trump administration’s prompt response to his tweet, Williams did put on a red MAGA hat to make an elated video that he addressed to Musk and posted to Instagram. “I was blown away!” he said, offering to make his hero some pancakes. “I love you, Elon. I’ll come down and cook for you at DOGE.”
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