Attorney General joined a coalition of 21 attorneys general on Oct. 27 in suing the Treasury Department's Financial Crimes Enforcement Network over a rule that ends beneficial ownership reporting for U.S. companies under the Corporate Transparency Act.

The suit, filed in U.S. District Court for the District of Oregon, alleges the rule exceeds FinCEN's statutory authority and is contrary to law and arbitrary and capricious, in violation of the Administrative Procedure Act and the U.S. Constitution.

Congress passed the Corporate Transparency Act to keep shell companies from hiding financial transactions from law enforcement. It requires beneficial owners to give FinCEN their names, addresses, birth dates and identification such as a passport or driver's license.

FinCEN's new rule exempts all U.S. companies and individuals from that reporting, exempts foreign companies from reporting U.S. persons who are beneficial owners, and commits to deleting information U.S. companies and individuals already filed. Bonta's office said those records likely include evidence of unsolved crimes.

In California, the Department of Financial Protection and Innovation, the state's financial services regulator, would have had access to the ownership data for investigations, the office said. Without it, regulators and police will have to rely on slower and less reliable ways to learn who owns a company, and states will lose a tool for collecting taxes.

“These anonymous accounts are often used for illegal activity — like by cartels and criminals to money launder, traffic drugs, or to hide bribes or illegal kickbacks,” Bonta said.

California joined Oregon, Illinois, Arizona, Colorado, Delaware, the District of Columbia, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Rhode Island, Virginia, Washington and Wisconsin.

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Rob Bonta

Attorney General · Democrat

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