A Republican-led U.S. House committee voted on Tuesday to advance legislation that would exempt American limited liability companies and other businesses from reporting on their beneficial owners under the Corporate Transparency Act, according to a report by OCCRP. 

The House Financial Services Committee voted 26-25 along party lines to advance the “Repealing Big Brother Overreach Act” after moving to repeal the 2020 anti-corruption law, OCCRP said. Under the proposal, foreign nationals would still have to report beneficial ownership information to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), but U.S. citizens operating domestic businesses would no longer be covered. 

The vote drew condemnation from corporate-transparency advocates, who characterized the legislation as an effort to reverse one of the most significant anti-corruption laws in U.S. history. 

“This bill would undo fifteen years of bipartisan work by Congress to end the scourge of anonymous shell companies,” said Erica Hanichak, deputy director of the FACT Coalition, in a statement. “There could be no greater gift to the fentanyl traffickers, fraudsters, and U.S. adversaries that rely on the anonymity that shell companies provide than gutting the Corporate Transparency Act.”

House Republicans are separately threatening to block FinCEN’s funding until the bureau finalizes a pending rule under the CTA in line with an amended proposal issued by the Trump administration in early 2025, Dow Jones Risk Journal reported earlier this week. Like the “Repealing Big Brother Overreach Act,” the interim rule would role back CTA obligations by limiting beneficial-ownership reporting requirements to foreign businesses only. 

If passed, the legislation would mark a sharp reversal for a transparency measure that was enacted in December 2020 after decades of criticism from the Financial Action Task Force and frustration within the law enforcement and regulatory communities over the ability of criminals to hide behind shell companies while committing money laundering, tax evasion, and other crimes. 

“I’ve seen firsthand how anonymous U.S. shell companies are used by kleptocrats, foreign officials, and cartels to launder illicit funds and purchase luxury assets in this country,” Debra LaPrevotte, a former F.B.I. official and senior investigator at Restitution Impact Ltd., told OCCRP. “Gutting the Corporate Transparency Act would eliminate a key tool needed by law enforcement to follow the money and stop the United States from being a safe haven for criminal proceeds.”

Rep. French Hill (R-AR) defended the proposed repeal by arguing foreign companies would still be required to report their owners and noting that beneficial ownership registries in Cyprus, UAE, and Turkey have not stopped money laundering from occurring in those jurisdictions, according to the report. 

Read more at OCCRP

Read the proposed legislation here