The Trump administration permanently ends beneficial ownership reporting for U.S. companies

The Bank Secrecy Act is 56 years old, and until the Sept. 11 attacks it was a relatively minor part of bank regulation ^[10]. Take the 25 years of the Patriot Act era out of that and about 31 years sit before it ^[1]; put the other way, roughly 45 per cent of the statute's working life has run inside the framework enacted 45 days after the attacks, on Oct. 26, 2001 ^[2][1][4]. "After 9/11, anti-money laundering was something banks had to take seriously," said David Zaring, the Elizabeth F. Putzel professor of legal studies and business ethics at the University of Pennsylvania's Wharton School ^[12].

The obligation that has gone was one companies filed. The obligations banks staff are the 2001 ones, and they are untouched: obtain, verify and record identifying information, including tax identification numbers, dates of birth and physical addresses, for every person who opens an account ^[3], then monitor transactions and file reports with the Treasury Department's Financial Crimes Enforcement Network on anything that might indicate money laundering or terrorist financing ^[4]. Those duties run per account and per transaction.

Banks have long said they struggle under rigid and costly compliance rules ^[8]. The account of the eliminated beneficial ownership filing carries no estimate of what it cost the companies that made it, nor any figure for what dropping it returns to them ^[5].

Dan Stipano, a partner at the law firm Davis Polk & Wardwell and a former regulator at the Office of the Comptroller of the Currency, said: "If you go back to the original purpose of the Bank Secrecy Act, which is to provide information and reports that are highly useful to law enforcement, criminal investigations, and tax investigations, that original purpose has been lost or de-emphasized at least, and the focus has tended to be more on technical compliance with rules" ^[11]. Read one way, cutting a reporting stream is the opposite of restoring usefulness. Read another, or rather the version I find more plausible on this evidence, the eliminated filing was the newest and least embedded layer, and its removal says nothing about the durability of the 2001 duties that generate the work ^[3][4].

What would break that read is a rulemaking reaching the customer identification requirement itself, or the threshold at which a suspicious activity report has to be filed, because those two set the volume ^[3][4]. When Congress imposed them, many lawmakers believed stricter compliance with the Bank Secrecy Act might have prevented the attacks ^[17]: 18 of the 19 hijackers had obtained U.S. identification documents ^[14], and the money moved by ordinary bank wire transfer between accounts in Saudi Arabia, Germany and the U.S., in the hundreds of thousands of dollars, without triggering a suspicious activity report ^[15]. "That experience demonstrated that banks serve as a powerful source of information for law enforcement," said Anne Balcer, general counsel for the Independent Bankers Association of Texas and principal at Community Bank Advisory Services ^[16].