The law was hailed as a historic step in the right direction — the culmination of more than a decade of work between Republicans and Democrats in Washington to crack down on dirty money.
The Corporate Transparency Act (CTA) targeted drug cartels and other dangerous criminals who use shadowy shell companies to move their ill-gotten gains. The bipartisan law, enacted in 2021 at the end of Donald Trump’s first term as U.S. president, was seen as a much-needed reform to America’s ability to fight financial crime.
But four years later, and now back in office, Trump has sharply narrowed the law’s reach, all while using fentanyl trafficking as a justification for a potentially devastating trade war against Canada.
“The fact that in the same month where the White House will declare a maximum effort fight against fentanyl that involves tariffs on Canada and Mexico for this purpose, that they will also put out a public statement saying that they’re not going to enforce one of our most important … ways of combatting fentanyl, getting to the money behind it within our own borders, I think it belies explanation,” said Scott Greytak, director of advocacy for anti-corruption group Transparency International U.S., which also has a Canadian chapter.
The Trump administration’s decision comes as the president continues to claim that deadly opioids are pouring in from Canada, despite his government’s own data showing less than one per cent of the fentanyl that U.S. border agents seized in the last fiscal year came from across the northern border.
‘A rationale for imposing harmful tariffs’
“Canada, one of our nation’s greatest allies, has long partnered with the United States on border security, demonstrating a shared commitment to addressing shared challenges, including fentanyl trafficking,” Michigan Sen. Gary Peters, the top Democrat on the Senate Homeland Security Committee, said in a statement to CBC Windsor.
“While President Trump has criticized Canada for not taking fentanyl issues seriously — using this as a rationale for imposing harmful tariffs — his administration is simultaneously working to weaken legislation passed by Congress that helps law enforcement combat the use of shell companies for financing illicit activities like drug trafficking,” Peters said.
The CTA had, for the first time, forced smaller companies to reveal the names of their true owners to the U.S. Treasury Department, which would then store them in a secure database accessible by law enforcement. Canada has a similar ownership registry, which is publicly searchable.
But in early March, the Trump administration announced it would stop enforcing penalties against U.S. citizens and companies that didn’t comply with the law.
Two days later, Trump slapped Canada and Mexico with broad 25 per cent tariffs, saying neither country was doing enough to curb the flow of fentanyl into the U.S. Trump has since rolled some tariffs back, but has threatened to reimpose them in April.
The fentanyl issue on the northern border, you know, basically was a red herring anyways.– Brian Masse, NDP MP, Windsor West, party’s critic for Canada-U.S. border relations
More recently, the administration nixed ownership reporting requirements altogether for U.S. citizens and companies, issuing a rule, which it expects to finalize at some point this year, that limits the law’s application to foreign companies registered to do business in the U.S.
Brian Masse, New Democratic Party MP for the Windsor West riding that’s directly across from Detroit, said the Trump administration’s decision will make it harder for investigators on both sides of the border to track and crack down on illegal flows of funds — which is “really at the heart of the operation” of organized crime.
“Everything’s going to get murkier,” said Masse, the NDP critic for Canada-U.S. border relations. “That’s no doubt.”
The FACT Coalition, another anti-corruption group, said the change would cut out 99 per cent of the entities the law originally covered, “effectively gutting the most significant anti-money laundering law in a generation.”
Greytak, with Transparency International U.S., called it “an awfully baffling incentive to come from an administration that has otherwise so fulsomely committed to fighting fentanyl and other drug trafficking.”
Rationale for changing law’s application
Trump and Treasury Secretary Scott Bessent have claimed the CTA’s ownership reporting requirements were “burdensome” and an “economic menace,” particularly for small businesses.
It appears to be a reversal from 2019, when the first Trump administration commended the then bill, saying it “would require corporations and limited liability companies in the United States to disclose their beneficial owners, a measure that will help prevent malign actors from leveraging anonymity to exploit these entities for criminal gain.”
The supportive statement, however, did note that lawmakers needed to improve the legislation, in part by “protecting small businesses from unduly burdensome disclosure requirements.”
Congress did just that, Greytak said. He and other supporters of the law say the reporting process is relatively simple. Companies need only fill out a form online that asks for information such as names and addresses, and a copy of government identification.
“This law was developed over a dozen years across multiple administrations — lots of iterations and revisions of this bill, lots of hearings on this bill, lots of scrutiny — and we think that the end product was really well tailored to be able to meet the threat here,” Greytak said.
Masse said “it’s not surprising,” however, that Trump supported weakening the law.
“They want less accountability for where their money goes in Washington, D.C., and across the fundraising, and the donors and the corporate elite,” he said.
“And the fentanyl issue on the northern border, you know, basically was a red herring anyways.”
U.S. President Donald Trump says ‘massive’ amounts of fentanyl cross into the U.S. from Canada, but in fact, less than one per cent of the synthetic opioid seized at American borders is at the northern border.
Masse’s riding includes a large chunk of Windsor, one of the Canadian cities expected to be among the most hurt by tariffs. It also includes the Ambassador Bridge, where roughly $300 million US in goods cross each day between Canada and the U.S.
Windsor is no stranger to the opioid crisis, either, so the fentanyl issue hits close to home, Masse said.
“We’re their point where entry and exit of the drugs can take place, and also weapons.”
Masse said he would “absolutely” like to see the federal government hire more border officers, particularly those with a “skill set that is more accustomed to dealing with the financial world” in response to the Trump administration’s recent actions.
In Washington, two senators who supported the CTA have demanded that the Treasury Department explain “the legal basis” for changing the law.
“We encourage you to fully implement the CTA so that law enforcement agencies around the country have access to information necessary to prevent human trafficking, terrorist financing, border smuggling, drug distribution, and many other categories of criminal activity,” Senators Chuck Grassley, an Iowa Republication, and Sheldon Whitehouse, a Democrat from Rhode Island, wrote in a March 10 letter.
It’s unclear if the senators have received a response. Both their offices, as well as the Treasury Department, did not return a request for comment on this story by publication time.
Other advocates have argued that the administration’s move won’t hold up in court.
Shadowy shell companies “are a favourite tool of” U.S. adversaries, as well as “fentanyl traffickers, money launderers, and tax cheats,” Ian Gary, executive director of the FACT Coalition, said in a statement after the Treasury Department first announced its change to how the law is applied.
“Hollowing out the Corporate Transparency Act is an unconstitutional subversion of Congress’s intent that will not survive judicial scrutiny,” he added.
