Most Americans have now heard about Project 2025, even if they only know those two words and nothing from the 900 pages of policies that will impact every person living in the United States. One area that has been overlooked is its plan for the US anti-money laundering regime.
It’s a massive problem: Nasdaq estimated in 2023 that “$3.1 trillion in illicit funds flowed through the global financial system.” Many of these funds go through the US into residential and commercial real estate, drug and human trafficking networks, and cybercrime and fraud schemes. Project 2025’s one-page anti-money laundering plan would cripple the government’s ability to address these threats.
Project 2025 references two policy areas: anti-money laundering and countering the financing of terrorism (AML-CFT) and the Corporate Transparency Act. US AML-CFT policy is largely carried out by the Financial Crimes Enforcement Network (FinCEN) as part of the Treasury. Project 2025 notes that FinCEN is “a relatively small bureau … with approximately 285 employees and a FY 2022 budget of $173 million” and “makes a significant contribution to law enforcement efforts.”
FinCEN cost under 0.00003% of the 2022 US budget and imposed tens of millions of dollars in civil penalties. Direct enforcement actions recovered between 49% and 98% of its operating budget.
Despite its small-but-mighty impact, Project 2025 has two issues with FinCEN. The first is that FinCEN “conducts almost no meaningful cost-benefit analysis” about its AML-CFT activities. The second is that it does not publish annual data about the number of reports filed by private entities like banks to help FinCEN fight financial crime, the number of prosecutions, convictions, and fines obtained by FinCEN, and total compliance cost estimates on private entities.
Misleading
The first point about no meaningful cost-benefit analyses is misleading. Many FinCEN rules are required to go through the executive branch’s rigorous cost-benefit analysis process to assess both the positive and negative economic impacts of a regulation on all affected parties.
For instance, a July 2024 proposed rule to revise the US AML-CFT framework went through this process and emphasizes “effective, risk-based, and reasonably designed AML/CFT programs” with an “outcomes-oriented approach” to minimize costs on the nearly 300,000 financial institutions affected. Though one could argue that FinCEN’s estimates are too low or are unable to quantify all possible costs, they are based on data provided by regulated industries and their associations used in their own compliance cost estimates.
The second point about not publishing data is — annoyingly — correct: FinCEN should collect and share more data about its activities and impact so the public and policymakers alike can better assess the effectiveness of the US AML-CFT regime.
Project 2025’s one-page anti-money laundering plan would cripple the government’s ability to address these threats.
However, it is not unreasonable to expect — given that Project 2025 itself recognizes that FinCEN is a small bureau — that they may need more staff to be able to collect and publish these data annually.
Yet, Republicans have repeatedly threatened to limit or cut FinCEN’s funding. The FY 2024 budget President Joe Biden proposed requested nearly $229 million for FinCEN, but Congress’s budget allocated $190.2 million — only about $200,000 more than its FY 2023 budget. An increased budget to hire more staff to review financial crime reports, to investigate and prosecute financial crimes, and to conduct cost-benefit analyses would address the twin goals of increasing FinCEN’s capacity to pursue successful investigations as well as publishing data related to its AML-CFT activities.
Against Transparency?
More funding for FinCEN is also needed to implement the Corporate Transparency Act (CTA). First proposed in 2008, this law passed as part of the 2020 national defense spending bill over then President Donald Trump’s veto on Jan. 1, 2021.
The CTA requires that some corporate entities (there are 23 exceptions) file reports with FinCEN including identifying information about any individual who owns 25% or more of the entity or who exercises substantial control over its day-to-day operations. In plain terms, it requires reporting of real, human owners to unmask anonymous shell companies that facilitate illicit finance and gives the government the information they need to pursue prosecutions of bad actors.
Project 2025 calls on Congress to repeal the CTA and insists “FinCEN should withdraw its poorly written and overbroad beneficial ownership reporting rule,” citing high costs for small businesses as a justification.
Low Costs
In fact, the vast majority of entities filing a beneficial ownership report are small, single-owner businesses that do not require significant time or money to file. In its cost-benefit analysis, FinCEN estimated that initial reports would cost between $85 for companies with simple beneficial ownership (such as one person who owns an LLC) to $2,615 for companies with complex beneficial ownership (such as multiple owners and companies linked together).
Ongoing costs for reporting updates are between $38 and $561, respectively. These costs largely mirror what companies are charging individuals to assist with their beneficial ownership filings. H&R Block charges $99 for a one-time filing and $149 per year for unlimited updated filing support.
Other countries that adopted a beneficial ownership registry conducted similar analyses with similar results. In the United Kingdom, economic impact assessments in 2002 and 2014 estimated low initial and ongoing compliance costs with its beneficial ownership registry. Firms like Cogency Global charge £120 ($155) for annual filings. Cost is not an issue for most filers.
Enabling Fraud and Cybercrime
Although Project 2025 also claims that the CTA “will do nothing material to impede criminal finance,” it is not possible to evaluate if it does not take effect. Small business associations have filed six federal court cases against the CTA in Alabama, Maine, Massachusetts, Michigan, Ohio, and Texas.
These cases make various legal claims related to five Constitutional amendments and a lack of clearly enumerated Congressional power in the CTA to regulate commerce, to oversee national security, and to impose and regulate taxation. Multiple cases filed with similar legal claims is a common tactic to accelerate appeals processes and increase the likelihood that it will be taken up by the Supreme Court, as seen with recent decisions on abortion and federal agencies’ regulatory powers. Without the CTA, FinCEN will lose access to information needed to investigate individuals and crimes committed behind anonymous shell companies.
Project 2025’s plan to undermine beneficial ownership reporting as part of the AML-CFT regime has wide-ranging harms. The plan will enable fraud and cybercrime networks to continue stealing money and data from millions of people. It will contribute to rising housing costs from foreign actors laundering their money through residential real estate, developers defrauding home buyers, and landlords allowing tenants to live in unsafe properties. It will interfere with law enforcement’s ability to disrupt drug and human trafficking networks. The government needs these tools to protect Americans.
