Twenty One States Sue Treasury Over a Rule Exempting Nearly All Companies From Ownership Reporting

Twenty-one state attorneys general sued Treasury on October 27 over a FinCEN rule that exempts every US company from the Corporate Transparency Act’s ownership reporting. The case, Oregon v. Bessent, was filed in federal court in Eugene, Oregon. It asks the court to throw out the rule and to stop FinCEN from deleting the ownership data it has already collected, a purge the complaint says is set for on or about February 10, 2027.

The plaintiffs are Oregon, New York, Arizona, California, Colorado, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, Virginia, Washington, Wisconsin and the District of Columbia. The defendants are Treasury Secretary Scott Bessent, the Treasury Department, FinCEN and its acting director, and, for one count, Attorney General Todd Blanche and Homeland Security Secretary Markwayne Mullin, whose written concurrences the exemption needed.

Photo: Chris Phan, CC BY 2.0 via Wikimedia Commons

What Congress passed and what Treasury changed

The Corporate Transparency Act became law on January 1, 2021, inside the fiscal 2021 defense authorization act, which Congress passed over a presidential veto. It told most small companies to report their real owners to FinCEN, so that law enforcement could see through shell companies. FinCEN’s 2022 rule estimated about 32.6 million existing reporting companies and about 5 million new ones each year. Companies formed before 2024 had until January 1, 2025, to file.

Then the policy turned. On March 2, 2025, Treasury said it would not enforce the law against US citizens or domestic companies. On March 26, FinCEN published an interim final rule, effective at once, that limited reporting to foreign companies registered to do business in the US and excused them from naming any US owners. “It is important to rein in burdensome regulations to the benefit of hard-working American taxpayers and small businesses,” Bessent said at the time. FinCEN made the rule final on August 14, 2026.

The complaint puts the result in Treasury’s own numbers. The final rule expects about 28,000 existing foreign reporting companies and about 1,800 new ones a year. Set against the 2022 estimates, the states calculate that about 99.92 percent of covered entities are now exempt. FinCEN had received about 15 million reports before the interim rule took effect.

The states’ claims

The suit has seven counts. Five go to the rules themselves: the states argue the interim and final rules exceed FinCEN’s authority under the statute and are arbitrary and capricious under the Administrative Procedure Act, and that the Blanche and Mullin concurrences were arbitrary too. The law lets Treasury exempt a class of companies only with the written concurrence of those two officials, and only where reporting would neither serve the public interest nor be highly useful to national security, intelligence and law enforcement efforts. The states say an exemption that covers nearly every company swallows the statute.

The other two counts target the deletion plan. The states say FinCEN adopted it without notice and comment, that it conflicts with the law’s requirement to keep reports for at least five years after a company dissolves, and that it breaks the Federal Records Act. They also argue it violates the separation of powers and the Take Care Clause, which tells the President to see that the laws are faithfully executed. They ask for the rules to be vacated and for an order or stay blocking the purge.

Why states have a stake

The Corporate Transparency Act gives state, local and tribal law enforcement access to the ownership database through FinCEN, with a court’s authorization. The states say they’d use it in criminal and civil investigations, consumer protection cases, judgment collection, bank supervision and tax enforcement. The complaint says that as of October 2026 FinCEN told Illinois’s financial regulator it had “not yet begun providing BOI access to nonfederal partners.” Once the records are deleted, that access has nothing to reach.

New York’s Letitia James framed the case around crime. “Secretive shell companies help drug traffickers, tax cheats, and other criminals hide their illegal profits,” she said. Treasury has defended the exemption as relief for small businesses from a costly filing requirement.

Federal enforcement of anti-money-laundering law hasn’t stopped. FinCEN still penalizes banks for money laundering control failures, as in its October penalty against Bank of America. The suit is about the one database that was meant to show who owns the companies behind the accounts.

What comes next

The complaint asks the court to stay the purge under the Administrative Procedure Act, so the first ruling to watch is whether a judge acts before February 10. Treasury hasn’t said it will delay the deletion while the case runs. Congress could also settle the question by amending the law. Until a court or Congress acts, the rule stands and the deletion date holds.