Banking and Finance Law Daily Wrap Up, BANK SECRECY ACT—D. Or.: 21 state AGs challenge FinCEN final rule rolling back beneficial information reporting, (Oct 28, 2026)

By Lauren Bikoff, MLS

The plaintiffs also seek to stop FinCEN from deleting previously collected beneficial-ownership data.

Oregon and 20 other plaintiff jurisdictions have sued to vacate the Treasury Department’s Financial Crimes Enforcement Network’s (FinCEN) 2025 interim and 2026 final beneficial-ownership reporting exemptions, alleging the agency exceeded its authority by excluding almost all companies covered by the Corporate Transparency Act (CTA). They also seek an injunction and an Administrative Procedure Act stay to block a planned one-sweep deletion of previously collected data on or about Feb. 10, 2027 (State of Oregon v. Bessent, No. 6:26-cv-2359 (D. Or. Oct. 27, 2026)).

Background. In 2022, FinCEN issued a final rule that established a beneficial ownership information (BOI) reporting requirement pursuant to the bipartisan CTA. In the rule, BOI was defined as identifying information about natural persons who directly or indirectly own or control a company. This final rule took effect in January 2024. However, in March 2025 under the Trump administration, FinCEN issued a final rule that limited reporting requirements exclusively to foreign reporting companies (see Banking and Finance Law Daily, Mar. 24, 2025). Then, in August 2026, FinCEN announced a final rule that “permanently” removed the requirement for U.S. companies and U.S. persons to report business entity BOI to FinCEN under the CTA (see Banking and Finance Law Daily, Aug. 12, 2026). In addition, FinCEN specified it would “delete” information previously reported by U.S. persons who will now be exempt from the BOI reporting requirement, effective with the other provisions of the final rule.

Complaint. The complaint was filed by Oregon state Attorney General and joined by the AGs in Arizona, California, Colorado, Delaware, the District of Columbia, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Rhode Island, Virginia, Washington, and Wisconsin.

According to the complaint, the final rule exempted all domestic companies from reporting, exempted U.S. persons from being reported in specified roles, suspended FinCEN-identifier updates for U.S. individuals and announced deletion of data covered by the exemptions. Using FinCEN estimates, the complaint calculates that the domestic-company exemption excludes approximately 99.92 percent of reporting companies covered by the statute as enacted.

The CTA permits the Treasury Secretary to create an additional exemption only after concluding, with written concurrence from the Attorney General and Homeland Security Secretary, that reporting would not serve the public interest and would not be highly useful for specified government efforts. The complaint says FinCEN cited costs to law-abiding small businesses and the asserted limited usefulness of collecting data from businesses not engaged in illicit activity. Treasury Secretary Scott Bessent called the decision a “victory for common sense and American small businesses” and said it would not compromise national security.

“The Trump administration’s rollback of the Corporate Transparency Act rules was a gift to fraudsters and corrupt actors worldwide,” said Mark Hays, Associate Director for Cryptocurrency and Financial Technology at the Americans for Financial Reform Education Fund. “Without rules requiring businesses to divulge their true ownership, every bad actor imaginable, from scam artists to abusive corporate landlords to international money launderers and many more will have a much easier time using anonymous shell companies to conceal their crimes.”

Authority and reasoning challenged. Count one in the complaint alleges that all four changes exceed FinCEN’s statutory authority or are otherwise contrary to law under the APA. Count two alleges the final rule is arbitrary and capricious because FinCEN relied on factors Congress did not intend, failed to consider important aspects of the problem, and departed from its 2022 position without an adequate explanation.

The plaintiffs also contend the data purge conflicts with the CTA’s requirement that FinCEN maintain submitted ownership information for at least five years after a reporting company terminates. They also invoke Federal Records Act procedures governing record disposal. Count six alleges the purge was adopted without required notice and comment because the interim rule did not mention it and it was not a logical outgrowth of that rule. Count seven alleges the planned deletion exceeds executive authority and violates separation of powers and the Take Care Clause because defendants identified no statutory authority to destroy the data.

The complaint says state and local law-enforcement agencies may obtain beneficial-ownership information, with court authorization, for criminal or civil investigations. Qualifying state financial regulators may use the data to supervise financial institutions’ customer-due-diligence compliance, while financial institutions may obtain the information for their own customer-due-diligence requirements and share it with supervising state regulators. The jurisdictions allege they intended to use the database for fraud investigations, consumer-protection enforcement, collections, tax administration and financial-institution supervision.

Relief sought. The plaintiffs ask the court to declare the final rule, written concurrences, and interim rule unlawful and to vacate them. They also request an injunction and stay preventing the data purge, along with costs and reasonable attorney fees.

Companies: Americans for Financial Reform

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