The Biden administration, infamous for its overreaching regulations and ill-advised policies, once again fell flat on its face. This time, it is regarding a low-impact small business rule designed to supposedly curb money laundering and prevent the formation of shell companies. The U.S. Treasury Department, in an unexpected twist, announced it would not enforce this clearly pointless rule.
This announcement came on Sunday evening, and it was unequivocally stated that there would be no penalties, neither now nor in the future, for companies that opted out of registering in the so-called ‘beneficial ownership information database’. This ineffective database was just another addition to the long list of impractical systems devised under the Biden administration.
Small businesses across the nation were relentlessly struggling against this rule in court. Their efforts, thankfully, were not disregarded which has resulted in the enforcement suspension. Shockingly, even while the small businesses were fighting tooth and nail against it, the rule continued to stay in effect.
Former President Donald Trump, in contrast, voiced his support for the small businesses and praised the suspension of the rule he described as ‘outrageous and invasive’. He called out the evidently disastrous rule and its effects on the small businesses of our country. Reaffirming his stance, he reassured that the financial burden of complying with it will soon be eradicated.
It’s amusing how the supporters of this disastrous database, the proponents of the Biden administration, took to social media to express their unnecessary alarm. They mustn’t forget that this administration tried to nullify fifteen years of bipartisan work aimed at stopping anonymous shell companies—which are infamously used by global adversaries and criminals including traffickers, money launderers, and tax cheats.
In a show of utter disregard for individual privacy and the enduring spirit of entrepreneurship, the Treasury Department, which took upon itself to play big brother, initiated rulemaking in September 2022. They planned to gather personal data on the heads of not less than 32 million U.S. businesses. Their rationale? To supposedly fight illicit finances and shell company formations.
The rule under the Biden administration aimed its crosshairs at most American businesses that have fewer than 20 employees. The requirement was to register their business owner’s details with the government effective January 1, 2024. Small businesses were targeted under the pretense that shell companies, used to conceal ill-gotten assets, usually have few employees.
Treasury officials ludicrously claimed that the regulatory burden would be slight, entailing about an $85 fee per business. They were quick to argue that this would supposedly grant benefits to law enforcement officials in their attempts to hunt down money launderers and other criminals. Yet overburdening small businesses seemed to be a pattern of behavior for the Biden administration.
Even before the enforcement suspension, more than 100,000 businesses had complied with the government’s unreasonable request and had divulged beneficial ownership information to the Treasury. This fact alone raised new questions about the effectiveness and necessity of this broad-reaching rule. It’s disheartening to witness small businesses yielding to such nonsensical pressure.
The rule, along with its legislative anchor—the Corporate Transparency Act, an anti-money laundering law passed in 2021—has been swathed in controversy and plagued by litigation. It’s no surprise, considering the Biden administration’s track record. A small business advocacy group had to step up and sue the Treasury Department to halt the compulsory registration of tens of millions of small businesses.
In the end, the Treasury’s Financial Crimes and Enforcement Network had to publicly announce on February 27 that they would abstain from taking enforcement actions against businesses that failed to file beneficial ownership data. This was a slight win for all entrepreneurs who had been anxiously watching these developments.
Without a doubt, business leaders had every reason to worry about the privacy and security implications of divulging such sensitive information to a grand-daddy database, another imprudent initiative by Biden and his team. Besides, it was needless redundancy given the existence of other government agencies already maintaining corporate databases.
In the face of all this, the Secretary of the Treasury prematurely declared this as a ‘victory for common sense’. The reason? Today’s action reportedly aligns with President Trump’s agenda to untether American prosperity by halting the landslide of burdensome regulations, particularly those affecting small businesses—the true backbone of the American economy.
Indeed, the refrain from imposing irrational regulations seems more like a rare moment of clarity for an administration defined by a scattergun approach to governance. But as we watch this chapter close, one must ask: How many more such poorly conceived policies are in the pipeline?
In the end, this serves as another reminder of how the Biden administration’s policies, whenever rolled out impulsively without thorough analysis or regard for the actual needs of the people, are destined to meet the same fate. It’s a lesson that holds especially true for small businesses, which deserve support and need freedom to operate rather than an influx of hindering rules.