The US Department of the Treasury announced Sunday the suspension of the Corporate Transparency Act in hopes of narrowing the Act to foreign reporting companies.

The Department of the Treasury is narrowing the Act to support the interests of American taxpayers and small business owners. The Treasury will not enforce any outstanding fines or penalties associated with the beneficial ownership reporting rule, or any potential fines after the rule change takes effect.

The Act aimed to prevent money laundering by requiring corporate entities to report their beneficial ownership and register their business with the Financial Crimes Reporting Network. The Act also regulates anonymous and illicit business ownership by differentiating small businesses from “shell companies” that are used by foreign entities to complete transactions such as arms deals, drug trafficking, or human trafficking. The suspension of the Act will ultimately make it harder for the Trump administration to prosecute financial crimes involving “shell companies” and harm consumers who do business with these companies unknowingly.

The US Supreme Court issued a nationwide stay in January, ruling that the government had the authority to regulate business reporting through the Commerce Power. They noted that preventing financial crimes outweighed the potential burden of filling out forms.

“This is a victory for common sense,” said US Secretary of the Treasury Scott Bessent. “Today’s action is part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy.”

“Small businesses suffer when they are forced to compete with fraudulent and criminal enterprises that exploit anonymous shell corporations to evade accountability,” said Richard Trent, executive director of the small business network Main Street Alliance (MSA), in a press release Monday.

A federal judge in the US District Court for the Northern District of Alabama previously ruled the Act was unconstitutional in March 2024, noting that Congress sometimes “enacts smart laws that violate the Constitution.” The court ruled that the regulation of business entities was outside the scope of the Commerce Power in the US Constitution.