21 attorneys general sue Treasury over rule letting shell companies hide owners

Twenty-one state attorneys general sued the Trump administration on Tuesday. They want to stop a Treasury Department rule that exempts companies from telling the government who owns them ¹. The suit was filed in U.S. District Court for the District of Oregon ¹.

The case is called State of Oregon v. Bessent. Oregon Attorney General Dan Rayfield and Illinois Attorney General Kwame Raoul lead it ². The coalition also includes Arizona, California, Colorado, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Rhode Island, Virginia, Washington, Wisconsin and the District of Columbia ¹.

What the rule does

Congress passed the Corporate Transparency Act in 2021 with bipartisan support. It created a database to help law enforcement trace criminals who hide assets behind shell companies, which are businesses that exist mostly on paper ². The law took effect Jan. 1, 2024 ¹.

The Financial Crimes Enforcement Network, known as FinCEN, is a Treasury agency. It runs the database ¹. On March 21, 2025, it issued an interim rule ending reporting for U.S.-formed companies and for U.S. owners of foreign entities, the states say ¹. In August 2026, Virginia's attorney general says, the Trump administration issued a rule exempting nearly all businesses ².

The states say the final rule would also delete ownership information already collected. They say that data may include evidence of unsolved crimes ¹².

What the states say

The coalition's 54-page complaint says the exemptions are "arbitrary and capricious" under the Administrative Procedure Act. That is the federal law that governs how agencies write rules ¹. It also says the Treasury Department lacks the authority to repeal a law of Congress through rulemaking ¹. The suit adds that officials skipped required steps, including consulting the Homeland Security secretary and the U.S. attorney general ².

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.

Virginia Attorney General Jay Jones put it in terms of accountability.

Investigators can no longer use the database this law created to hold bad actors accountable.

What happens next

The states ask the court to declare the interim and final rules unlawful and to throw them out. They also ask it to block Treasury from purging the data ¹. If they win, FinCEN would have to keep collecting and maintaining the ownership database for law enforcement ². The Treasury Department did not immediately respond to a request for comment ¹.

These are the states' allegations. No court has ruled yet.

That matters because anonymous companies are a common tool for hiding money. Cutting the database leaves investigators with fewer ways to follow it.

The Record

1. Jan 1, 2024The Corporate Transparency Act took effect, requiring ownership reports to FinCEN ¹.
2. Mar 21, 2025FinCEN issued an interim final rule ending reporting for domestic companies and certain U.S. owners of foreign entities ¹.
3. Aug 1, 2026The Trump administration issued a rule exempting nearly all businesses, per Virginia's attorney general (the source gives only the month, August 2026) ².
4. Oct 27, 2026Twenty-one attorneys general sued in federal court in Oregon ¹².

Sources

1. Courthouse News, “Attorneys general sue Treasury Department over corporate ownership reporting exemptions” (2026-10-27). courthousenews.com/attorneys-general-sue-treasury-department
2. Virginia Office of the Attorney General, “Attorney General Jones Challenges Trump Administration's Gift to Fraudsters and Tax Cheats” (2026-10-27). oag.state.va.us/media-center/news-releases/3143-attorney-gen

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