Regulatory change is nothing new in the banking and financial services world. However, under the Trump administration, the pace of deregulation has accelerated sharply, leaving many financial crime compliance (FCC) teams wondering how to navigate the new landscape.
According to Workfusion, on 21 March 2025, the U.S. Treasury announced it would not enforce most aspects of the Corporate Transparency Act (CTA). An interim final rule was introduced, offering wide-ranging exemptions for domestic reporting companies. The CTA had required businesses to disclose their ultimate beneficial owners (UBOs) to the federal government.
Now, domestic UBO reporting obligations are essentially eliminated, with the number of reporting companies dropping from around 32m to just 12,000—a 99% exemption rate. Foreign organisations with offices in the U.S. are also exempt from disclosing UBO information, removing a major component of decades-long anti-money laundering (AML) reform efforts. Critics warn the rule contradicts well-established evidence that U.S. shell companies are exploited by criminal actors.
However, FCC teams should not assume these developments lessen their responsibilities.
Ian Gary, executive director of the FACT Coalition, said that the rule is “very unlikely to be upheld in court.” State attorneys general and local enforcement agencies, who were poised to access UBO databases, are expected to challenge the move, arguing it harms their ability to combat crime. Furthermore, the Treasury Secretary’s power to create exemptions is constrained by legal requirements, including obtaining agreement from Homeland Security and the Attorney General. As Politico noted on 25 March 2025, Treasury’s new stance contradicts over a decade of national risk assessments highlighting domestic anonymous entities as serious money laundering risks.
Meanwhile, banks should prepare for increased scrutiny from state-level regulators. A Risk Management Association blog recently highlighted that state interventions are a historic trend during periods of federal deregulation, such as during the Reagan and Bush administrations. WorkFusion has pointed to enforcement actions such as the New York State Department of Financial Services’ (NYDFS) $30m fine against Robinhood’s cryptocurrency arm in 2022 for alleged BSA/AML compliance failures. Similarly, ICBC faced $32.4m in penalties in 2024 following joint action by the Fed and NYDFS over deficiencies in its New York branch’s AML programme.
The states have already mobilised in 2025. In January, the Conference of State Bank Supervisors (CSBS) announced an $80m fine against Block, Inc., resulting from a multi-state examination that uncovered violations of the Bank Secrecy Act and AML laws. This shows a clear trend: states are prepared to act collectively to enforce compliance.
The evolving regulatory environment presents new challenges for FCC teams. As the Risk Management Association emphasises, while banks have adapted to regulatory cycles before, the current level of fragmentation and unpredictability raises the stakes. Non-compliance risks heavy financial penalties, reputational damage, and loss of customer trust. Moreover, oversight from international regulators is expanding, with the UK’s Financial Conduct Authority (FCA) broadening its operations into the U.S. and Asia in April 2025, highlighting that global scrutiny of AML practices remains intense.
Sanctions compliance, in particular, remains firmly in place. Despite federal deregulation efforts around AML, there has been no change to sanctions rules, meaning banks must continue prioritising compliance in this critical area of FCC operations.
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