Attorneys general sue Treasury Department over corporate ownership reporting exemptions

A coalition of 21 attorneys general say the department pushed through rules that eliminate ownership information for shell companies, violating the Corporate Transparency Act.(CN) — A coalition of 21 state attorneys general sued the Trump administration Tuesday to stop a Treasury Department regulation that exempts companies from reporting ownership information.The coalition filed the lawsuit in the U.S. District Court for the District of Oregon. The attorneys general say the department ignored Congress’ judgment in adopting the new exemptions, violating the Administrative Procedure Act, the Corporate Transparency Act and the U.S. Constitution’s separation of powers and the Take Care Clause.The Corporate Transparency Act tasks the Financial Crimes Enforcement Network, a subagency within the Treasury department, with collecting what is known as “beneficial ownership information” about the people who own or control corporations, including those organized through complex, layered structures and “secretive shell corporations.” The act took effect Jan. 1, 2024.However, the Trump administration “made a sudden about-face,” the coalition says. On March 21, 2025, the network issued an interim final rule eliminating reporting requirements for domestic companies and certain U.S. owners of foreign entities. The final rule would also delete all previously collected records, the coalition says.“These rules created two entirely novel exemptions to the CTA’s reporting requirements: first, they exempted all entities formed in the United States from reporting any ownership information; second, they exempted foreign entities from reporting any information about or from their U.S. owners,” the coalition says in its 54-page complaint.“Most fundamentally, defendants lack the authority to repeal an act of Congress by promulgating an exemption via rulemaking,” the coalition continues.The coalition argues the exemptions are “arbitrary and capricious” under the Administrative Procedure Act. The Treasury Department and its officials, along with U.S. Attorney General Todd Blanche and Homeland Security Secretary Markwayne Mullin, are listed as defendants in most of the five counts alleging violations of the act.The coalition also says the department violated the Constitution’s Take Care Clause by announcing plans to purge all data related to beneficial ownership information.“The Trump Administration is unlawfully rolling back reporting requirements meant to help law enforcement track down bad actors who hide financial assets in shell companies,” California Attorney General Rob Bonta said in a statement. “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.”The attorneys general are asking the court to declare the interim and final rules unlawful and vacate them, and to block the department from purging the data.The coalition includes Arizona, California, Colorado, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Virginia, Washington, Wisconsin and the District of Columbia.The Treasury Department did not immediately respond to a request for comment.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads