The administration has once again attempted a power grab, this time through agency regulation. This approach challenges an act of Congress, a tactic rejected by the Supreme Court majority. On August 14, the Financial Crimes Enforcement Network, part of the U.S. Treasury Department, issued a final rule altering the Corporate Transparency Act significantly.

The implications are vast. Consider a scenario where a fentanyl trafficking group uses anonymous LLCs to purchase businesses for money laundering. Legitimate revenues mingle with drug profits under this arrangement. The LLC structure conceals the true owners, and provides a façade of legitimacy. Honest business owners thus find themselves at a disadvantage against entities backed by illegal funds.

The Corporate Transparency Act was enacted in 2021 to aid law enforcement. It requires corporations and LLCs to file reports on beneficial ownership. This information is crucial for tackling money laundering and other criminal activities. Congress deemed these requirements reasonable to help identify those financing illegal operations, even though they also apply to ordinary businesses.

However, the Treasury has a catch-all provision. The Secretary may exempt entities if reporting does not serve the public interest. The Financial Crimes Enforcement Network used this to exempt all domestic LLCs, narrowing the law to foreign entities only. This contradicts Congress’s intention to cover small domestic LLCs, initially estimated at 32.6 million.

This regulation undermines the purpose of the statute, removing nearly all targets intended by Congress. The 2017 Congressional Record highlighted dangers of anonymous shell companies, illustrating abuses including money laundering and financing terrorism. It offered examples like Viktor Bout’s network of shell corporations for arms trafficking, and a U.S. company linked to an Iranian bank financing Iran’s missile program.

The Justice Department reported issues like corrupt foreign officials using U.S. shell companies for money laundering, stymied by untraceable corporate records. This new rule starkly contrasts with the Supreme Court’s doctrine from West Virginia v. EPA. The major questions doctrine demands clear congressional authorization for sweeping regulation, emphasizing Congress’s accountability.

By erasing beneficial ownership reporting, the network removed a key legislative intent. This decision stems from high reporting costs, but also mandates deleting existing data on domestic entities. Consequently, President Trump permits trafficking operations to continue with minimal obstacles. Such actions pose a significant cost to the American public.

Kimberly Wehle, a law professor and author, highlights these concerns. Her works include “How to Read the Constitution — and Why” along with a newsletter, “The Little Law School.” Copyright 2026 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.