“Have you conducted any analysis of the number of terrorists, human traffickers, drug cartel leaders, foreign adversaries, or other malign actors and facilitators who will be able to abuse the U.S. financial system to hide their illicit activity, absent enforcement of the Corporate Transparency Act?”

“Treasury announced earlier this month that it would refuse to enforce the law and would somehow fashion new rules limiting the reporting requirement to foreign entities alone – even though the main problem that Congress sought to address was the use of opaque entities in the United States, which may be foreign-owned or controlled.”

Full letter here

Representative Maxine Waters (D-CA), Ranking Member of the House Financial Services Committees and Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, were joined by 17 Congressional Democrats in sending a letter to Treasury Secretary Scott Bessent, expressing deep concern over the agency’s recent decision to suspend enforcement of the Corporate Transparency Act (CTA). This decision, seemingly influenced by a post from Elon Musk on X, poses significant risks to national security and the integrity of the U.S. financial system, while also paving the way for President Trump and his insiders to facilitate financial crime and further harm the integrity of the U.S. financial system.

“We write regarding the Department of the Treasury’s deeply misguided announcement – seemingly triggered by a single Elon Musk social media comment – that it has suspended enforcement of the Corporate Transparency Act (CTA),” wrote the lawmakers. “As this law was passed with overwhelming bipartisan support, it is astonishing that you have announced your intention to not fully implement or enforce it.”

They noted that Treasury’s decision not to enforce the law came at a time when Musk himself reportedly may be benefiting from foreign investments made through legal entities designed to hide the identities of the foreign investors, including tens of millions of dollars from wealthy investors from the People’s Republic of China.

Congress passed the Corporate Transparency Act as part of the National Defense Authorization Act for Fiscal Year 2021 and sought to make it more difficult for bad actors to use anonymous shell companies to facilitate money laundering and other financial crimes. Congress specifically found that requiring companies to report their true beneficial owners was “needed” to “protect vital United States national security interests” and to “bring the United States into compliance with international anti-money laundering and countering the financing of terrorism standards.” Treasury finalized the regulations implementing the law in 2022, having found that opaque legal entities were being used to hide the proceeds of terrorist financing, drug trafficking, sanctions evasion, and other illicit activity.

Against those problems the CTA was designed to address, the lawmakers called on Treasury to be transparent about the process by which it chose to suspend enforcement of that law and the steps it will take to mitigate the risks to our economy and national security.

“Given that this choice will jeopardize our national security and the integrity of our financial system by allowing for the proliferation of the use of anonymous shell companies for money laundering and other financial crimes, we seek answers about the process and impact of your decision,” wrote the lawmakers. 

The lawmakers argue that failure to fully implement the CTA could lead to a resurgence of the very financial abuses Congress sought to eradicate, raising concerns about the effectiveness of oversight in the financial sector. 

“[Y]ou somehow concluded that a massive new exemption from the law is warranted even though it would create additional opportunities for criminals to exploit the financial system and even though Treasury has no real idea of how much the exemption will hamper law enforcement and national security officials in their investigations.”

The lawmakers continued: “We are alarmed that you are choosing to create such significant risks to our financial system and to our national security without providing any transparency, rationale, or plan for how to mitigate those threats.” They asked that the Treasury Department respond to their questions by April 7, 2025.  

The letter was also signed by Representatives Nydia Velázquez (D-NY), Brad Sherman (D-CA), Gregory Meeks (D-NY),  David Scott (D-GA), Stephen F. Lynch (D-MA), Al Green (D-TX), Emanuel Cleaver, II (D-MO), Bill Foster (D-IL), Joyce Beatty (D-OH), Juan Vargas (D-CA), Sean Casten (D-IL), Rashida Tlaib (D-MI), Sylvia Garcia (D-TX), Nikema Williams (D-GA), Brittany Pettersen (D-CO), Cleo Fields (D-LA), and Senator Ron Wyden (D-OR).

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