Treasury fights shell companies

Treasury Secretary Janet Yellen announced that 100,000 businesses have joined a new database that collects “beneficial ownership” information on firms as part of a new government effort to unmask shell company owners.

Yellen said in remarks Monday that the new Treasury database that is collecting beneficial ownership information sends the message that “the United States is not a haven for dirty money.”

Yellen visited Treasury’s Financial Crimes Enforcement Network — known as FinCEN— in Vienna, Va., to discuss the launch of the database with the new year. She also spoke about upcoming real estate rules meant to increase transparency about the people and companies buying up property in the U.S.

In 2021, the bipartisan Corporate Transparency Act was signed into law, giving Treasury the authority to write new rules on beneficial ownership. And as of Jan. 1, most U.S. firms must report identifying information about who directly or indirectly owns or controls them.

The rule requires most American businesses with fewer than 20 employees — roughly 32.6 million companies — to register with the government.

In November 2022, the National Small Business Association sued Treasury over the database and argued that the new reporting rule violates the U.S. Constitution, saying it is unduly burdensome on small firms, violates privacy and free speech protections and infringes on states’ powers to govern businesses.

A judge is expected to decide on the matter imminently.