Trump administration weakens US anti-money laundering laws
For decades, the USA was regarded as a global role model in the fight against money laundering and financial crime. However, with Donald Trump's return to office, the American anti-financial crime system is undergoing a profound change: key laws such as the Corporate Transparency Act are being largely suspended for US companies, the resources of the financial regulator FinCEN are being drastically reduced and the enforcement of international anti-corruption regulations is being temporarily suspended. While technological innovations such as artificial intelligence are intended to make the fight against financial crime more efficient, experts are warning of new loopholes and an increasing risk due to anonymous company structures and reduced controls. The current developments raise the question of whether the USA is jeopardizing its role as a pioneer in the international fight against financial crime.
Since the threat to international security posed by money laundering and terrorist financing has become increasingly apparent, the US has been one of the pioneering nations in combating these two threats. Be it the follow-the-money approach from the pursuit of drug cartels and their bosses, or the introduction of far-reaching sanctions against Eastern Bloc countries during the Cold War, the US has always been a standard-bearer in the fight against money laundering and terrorist financing.
In retrospect, the anti-financial crime regulations in the USA were strongly influenced by international standards. The recommendations of the FATF (Financial Action Task Force) in particular shaped the regulations. The USA has been a member of the authority since 1989. The recommendations were integrated into existing US legislation.
The OFAC (Office of Foreign Assets Control) is an important institution in the USA. Its tasks are the enforcement and administration of economic sanctions. These are imposed on countries, organizations and individuals. In addition to OFAC, there is also the FinCEN (Financial Crimes Enforcement Network), which analyzes suspicious transactions and monitors compliance with the Money Laundering Act.
An important law to combat money laundering in the USA is the CTA (Corporate Transparency Act). This is a law to increase the transparency of corporate structures and thus combat financial crime.
The law obliges companies to report their true owners to FinCEN.
However, there have been some changes since the new president took office, meaning that not all companies are obliged to do so.
Prior to Donald Trump's term in office, the USA cooperated with many other FATF member states as part of its AFC policy. The aim was to combat global threats such as terrorist financing and money laundering. In addition, the above-mentioned OFAC sanctions were used to prevent illegal financial activities.
Since Donald Trump became president again in 2025, the anti-financial crime policy in the USA has changed fundamentally. The regulations affect both the enforcement of anti-money laundering measures and regulation.
The developments are as follows:
1. weakening of enforcement by the Ministry of Finance
One of the most significant changes concerns the Corporate Transparency Act (CTA).
The CTA was originally intended to create more transparency in corporate structures. This was intended to make it easier to combat money laundering and letterbox companies. Under the new president, however, the Treasury Department initially decided to suspend enforcement of the Corporate Transparency Act. The result of this suspension is that companies that have not submitted their ownership data by March 21, 2025 will not be penalized for the time being. Compliance with this law was voluntary until then. The Financial Industry Regulatory Authority (FinCEN) announced that it will not impose fines or penalties on US domestic companies or their beneficial owners that do not report beneficial ownership information.
This weakens the authorities and prevents them from investigating illegal activities behind disguised corporate structures. As a result, more financial crime is possible through anonymous structures. However, this voluntary reporting was dropped again on February 18. The "Final Interim Rule" has been in force since March 21. This removes the obligation for US companies and US persons to report beneficial ownership information (BOI) to FinCEN in accordance with the Corporate Transparency Act. In this interim rule, FinCEN revises the definition of ''reporting entity'' in its implementing regulations to mean only those entities that are incorporated under the laws of another country and that have registered to do business in a U.S. state or tribal jurisdiction by filing a document with a Secretary of State or similar agency (formerly known as ''foreign reporting entities''). FinCEN also exempts entities previously known as ''domestic reporting entities'' from BOI reporting requirements. In conclusion, companies recognized by FinCEN as domestic reporting companies are no longer required to report any beneficial owners.
However, foreign companies must comply with the obligations.
This increases the risk of financial crime by domestic companies.
2. reduction of resources for FinCEN
The Financial Crimes Enforcement Network (FinCEN) is a key authority in the US in the fight against money laundering and terrorist financing. A lot has changed here too since Trump took office. The agency has been significantly weakened by staff reductions and budget cuts. FinCEN has limited resources and is therefore struggling to fulfill its task effectively. Critics of "Project 2025" (a plan to reshape the executive branch) predict that the budget cuts and staff reductions will significantly hamper the US in the fight against financial crime.
(Project 2025 Will Cripple US Anti-Money Laundering Capabilities - Inkstick)
3. use of AI technology
Under Trump, artificial intelligence and machine learning will continue to be used. AI is intended to help combat money laundering more efficiently. AI-based systems should improve transaction monitoring. This can reduce false positives. This allows compliance teams to focus on high-risk cases.
In addition, there will be improvements in customer due diligence through the automation of risk assessments. The modernizations are a positive step at first glance. However, the positive effects are likely to remain limited due to the reduction in the enforcement of existing laws. By suspending the Crypto Enforcement Team, there is one less authority that can use the simplifications of AI-based systems. If the false positive rate can be reduced as a result, it would not have been necessary to close authorities, only to downsize them.
4 Foreign Corrupt Practices Act (FCPA)
On February 10, 2025, President Donald Trump signed an executive order entitled "Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security". This orders no new FCPA investigations or enforcement for 180 days. The FCPA is a US federal law that prohibits companies and individuals from providing bribes or other benefits to foreign officials in order to obtain business advantages. As part of FCPA investigations, US authorities such as the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are investigating whether companies have violated these anti-corruption regulations. The aim is to reassess enforcement. The aim is to better align these with the foreign and economic policy objectives of the USA. The suspension of investigations for 180 days represents a massive weakening of the fight against corruption. Due to the importance of American politics for the whole world, it is to be feared that this will lead to an increase in corruption worldwide.
Conclusion:
The latest political decisions and regulatory changes under the Trump administration mark a clear change of direction in the US fight against money laundering and financial crime. While the USA was previously regarded as a global pioneer in the fight against financial crime and consistently implemented international standards, the suspension of important reporting obligations, budget cuts at FinCEN and the temporary suspension of anti-corruption measures have led to a significant weakening of enforcement power. In particular, the exemption of domestic companies from transparency obligations opens up new loopholes for financial crime. Despite the use of modern technologies such as artificial intelligence, the effectiveness of the measures remains limited due to the reduction in resources and institutional weaknesses. Overall, this development not only threatens to make the US financial markets more susceptible to illegal activities, but also sends a negative signal to the global financial world and international cooperation in the fight against money laundering and corruption. The coming months will show whether the USA will once again strengthen its role as a role model in anti-financial crime policy or continue to lose influence.
