Accessibility links Skip to main content Keyboard shortcuts for audio player Open Navigation Menu --> Newsletters NPR Shop Close Navigation Menu Home News Expand/collapse submenu for News National World Politics Business Health Science Climate Race Culture Expand/collapse submenu for Culture Books Movies Television Pop Culture Food Art & Design Performing Arts Life Kit Gaming Music Expand/collapse submenu for Music Tiny Desk New Music Friday All Songs Considered Music Features Live Sessions Podcasts & Shows Expand/collapse submenu for Podcasts & Shows Daily Morning Edition Weekend Edition Saturday Weekend Edition Sunday All Things Considered Up First Here & Now NPR Politics Podcast Featured Wait Wait...Don't Tell Me! Fresh Air Wild Card with Rachel Martin It's Been a Minute Planet Money Get NPR+ More Podcasts & Shows Search Newsletters NPR Shop Tiny Desk New Music Friday All Songs Considered Music Features Live Sessions About NPR Diversity Support Careers Press Ethics The Corporate Transparency Act once had bipartisan support. What happened? The Corporate Transparency Act was supposed to shed light on shell companies. It had bipartisan support, until it didn't. Why does the Trump administration want to shelve it? National The Corporate Transparency Act once had bipartisan support. What happened? May 29, 20264:47 AM ET Heard on Morning Edition By Wailin Wong , Sally Herships The Corporate Transparency Act once had bipartisan support. What happened? Listen · 3:26 3:26 Transcript Toggle more options Download Embed Embed "> <iframe src="https://www.npr.org/player/embed/nx-s1-5835202/nx-s1-9789673" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player"> Transcript The Corporate Transparency Act was supposed to shed light on shell companies. It had bipartisan support, until it didn't. Why does the Trump administration want to shelve it? Sponsor Message
A MARTÍNEZ, HOST:
The Corporate Transparency Act was supposed to shine a light on shell companies formed in the U.S. The law went into effect in 2024. It had bipartisan support - until it didn't. The Indicator's Wailin Wong and Sally Herships explain why shell companies are still tricky to expose.
SALLY HERSHIPS, BYLINE: To create a new company, you're often asked for less information than you need to get a library card. Gary Kalman is one of the founders of the FACT Coalition. That's an international organization that fights illicit finance.
GARY KALMAN: Most people don't realize that you can form a company in the United States without naming who it is. And if that company is involved in nefarious activity, law enforcement has no idea who's behind it.
WAILIN WONG, BYLINE: Gary says, take this one time back in 2009 when the U.S. was in Afghanistan. The Department of Defense had contracted with a U.S.-based trucking company.
KALMAN: It turns out that that company had strong ties to the Taliban.
HERSHIPS: What? Wait a second. What?
KALMAN: You are right to go, wait, wait. Right? This is insane.
HERSHIPS: Gary says groups like the Taliban need to make money to fund their operations, and they can't just operate openly. So hiding behind shell companies is an easy fix.
WONG: Now, we want to be clear that shell companies have legitimate uses, like holding assets or for mergers or acquisitions. But the Corporate Transparency Act was intended for when those companies are used for illegal purposes. But one Sunday night in March of last year, Trump's Treasury tweeted out an announcement. It wasn't going to enforce the law until new rules were established to target foreign-owned companies only. It's hard to estimate how much money flows through anonymous shell companies, but according to a report from the International Monetary Fund, $12 trillion around the world is held in, quote, "empty corporate shells." They're used for tax engineering, avoidance and even tax evasion.
HERSHIPS: Still, there are serious concerns about the Corporate Transparency Act, like turning over personal data to the federal government. The National Small Business Association says the law is burdensome and unconstitutional. Todd McCracken is president and CEO. He says their 65,000-plus members are being affected.
TODD MCCRACKEN: So we feel like we're caught up in this activity that has nothing to do with us, but being forced to bear the brunt of data collection, data reporting, worries about penalties and fines.
WONG: Todd says there's confusion over who has to submit data. The law says all beneficial owners are required to. That's anyone with, quote, "substantial control over a company" or anyone who owns or controls at least 25% of a company. He says in a small business, that could be almost any employee. And if someone gets it wrong, they could even end up in prison.
HERSHIPS: But Gary, our financial crime expert, says it isn't confusing and that, like, a lot of federal laws, only someone who willfully breaks it will get in trouble.
KALMAN: Truly small businesses don't have a problem. And by the way, over 80% of businesses in America are nonemployer firms, meaning there's one person. They don't have any employees. No one's confused about who owns them.
HERSHIPS: Two bills are currently moving through Congress. One was proposed in the Senate and one in the House, but both would do pretty much the same thing - permanently exempt Americans from the law.
WONG: Wailin Wong.
HERSHIPS: Sally Herships, NPR News.
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