California Attorney General Rob Bonta announced in Oakland on Tuesday, October 27, 2026, that California has joined a coalition of 21 attorneys general in a lawsuit challenging a rule by the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) that permanently removes Beneficial Ownership Information (BOI) reporting requirements for U.S. companies and U.S. persons under the Corporate Transparency Act.

Source: California Attorney General's Office

The lawsuit was filed in the U.S. District Court for the District of Oregon. It alleges that FinCEN's new rule is in excess of statutory authority, contrary to law, and arbitrary and capricious, in violation of the Administrative Procedure Act and the U.S. Constitution. The defendants include Treasury Secretary Scott Bessent, the Treasury Department and FinCEN, and the lawsuit also lists the heads of the U.S. Departments of Justice and Homeland Security as defendants, according to Reuters.

"The Trump Administration is unlawfully rolling back reporting requirements meant to help law enforcement track down bad actors who hide financial assets in shell companies. These anonymous accounts are often used for illegal activity — like by cartels and criminals to money launder, traffic drugs, or to hide bribes or illegal kickbacks," Attorney General Bonta said. "Congress passed the Corporate Transparency Act with bipartisan support because it understood law enforcement needed an important additional tool to root out illegal financial transactions and corruption."

What the Corporate Transparency Act required

The Corporate Transparency Act, a 2021 law, requires companies to report their beneficial ownership information to FinCEN so that shell companies cannot hide their financial transactions from law enforcement. Beneficial owners must submit their names, addresses, birth dates and up-to-date identification records, such as a passport or driver's licence, and the information is then shared with law enforcement agencies for investigations into money laundering, drug trafficking, bribery and other illicit finance.

Under FinCEN's new rule, finalised in August, all U.S. companies and individuals are exempt from the reporting requirements, and foreign companies are also exempt from reporting any U.S. persons who are their beneficial owners. FinCEN says collecting the information from these entities does not serve the public interest, and the rule commits FinCEN to deleting all information previously reported by U.S. companies and individuals — records the states say likely include evidence of unsolved crimes.

Source: Reuters

"The executive branch cannot repeal a law by rulemaking. That fundamental principle resolves this case," the lawsuit states, as reported by Reuters. The states argue the administration has effectively gutted the 2021 law by exempting more than 99.9% of the companies originally required to disclose information about their owners.

How the states say the rollback hurts them

In California, the Department of Financial Protection and Innovation — the state's financial services and consumer protection regulator — would have had access to FinCEN's ownership information for investigative and regulatory purposes. The Attorney General's office says the rule will force law enforcement and regulators to use slower, less reliable and less successful procedures to obtain the same information, and that states will be unable to use the data to enforce compliance with state tax laws, depriving them of tax revenue they would otherwise collect.

The Trump administration defends the rollback as relief for legitimate businesses. Treasury Secretary Scott Bessent cast the August rule as "eliminating a burdensome reporting requirement for millions of law-abiding business owners without compromising our national security," according to Reuters. The Treasury Department did not respond to a request for comment on the lawsuit.

What it means for small businesses, including diaspora firms

The fight matters directly to the Punjabi diaspora's many small businesses — trucking companies, restaurants, stores and property firms organised as LLCs and corporations across California, New York, New Jersey, Texas and other states in the coalition. While the rollback stands, U.S. companies have no federal ownership filing to make. If the states win and the court overturns the rule, the reporting duty the 2021 law created could return, and companies would again have to file their owners' details with FinCEN.