Illinois Attorney General Kwame Raoul is co-leading a lawsuit to stop a Trump administration rule that the states say guts the Corporate Transparency Act, a law meant to help police and prosecutors catch money launderers, fraudsters and tax cheats.

Raoul and Oregon Attorney General Dan Rayfield lead a coalition of 21 attorneys general in the challenge, according to a release from Raoul's office issued Oct. 27.

The lawsuit targets a new regulation that overturns a requirement that businesses tell the federal government who actually owns and controls the business. Raoul and the coalition say criminals often stash money in shell companies designed to hide ownership information from law enforcement and taxing authorities.

According to the release, the U.S. Treasury Department is using its Financial Crimes Enforcement Network, or FinCEN, to exempt 99.9% of businesses from the law. FinCEN also announced it will purge all existing ownership data for those exempted businesses by February 2027.

"Yet again, the Trump administration is siding with bad actors and lawlessness over the interest of the American people – this time attempting to gut a bipartisan law intended to protect our country from fraudsters and money launderers," Raoul said. "The administration's rule will empower tax cheats while simultaneously depriving law enforcement of essential data used to stop and prevent financial crimes. I will continue to fight these attempts to erode the rule of law in this country."

Congress passed the Corporate Transparency Act with bipartisan support in 2021 in response to the problem of secret shell corporations, the release said. The act created a U.S. Department of Treasury database of business owners, both foreign and domestic, that law enforcement can use to trace dirty money, track down stolen assets, expose financing of terrorism, and uncover bribes and political payoffs.

In the complaint, the attorneys general assert that FinCEN's rules make the act nearly useless. In August 2026, FinCEN issued a rule exempting all corporate entities formed in the United States from reporting any ownership information, while also exempting foreign entities from reporting any information about or from U.S. owners. The release said FinCEN then announced, without advance warning or a public comment period, that it would delete ownership information already in the database.

What the lawsuit claims

Raoul and the attorneys general argue in their lawsuit that FinCEN:

  • Violated the Corporate Transparency Act and Administrative Procedure Act.
  • Skipped required legal steps before changing the rule.
  • Acted arbitrarily and without a reasonable explanation.
  • Failed to properly consult the secretary of Homeland Security and the U.S. attorney general before exempting nearly all businesses.
  • Violated the separation of powers and the Take Care Clause of the U.S. Constitution.

The coalition is asking the court to declare FinCEN's rule unlawful and require the agency to keep collecting and maintaining the ownership information database for law enforcement.

Joining Raoul and Rayfield are the attorneys general of Arizona, California, Colorado, Delaware, the District of Columbia, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Rhode Island, Virginia, Washington and Wisconsin.