U.S. President Donald Trump's goal isn’t fighting drug cartels, it’s putting the screws on Canada on trade, Rita Trichur writes.Mark Schiefelbein/The Associated Press
Remember when U.S. President Donald Trump used fentanyl trafficking as a pretext to slap emergency tariffs on Canada?
Well, now Mr. Trump is handing drug smugglers a big gift.
The United States will stop unmasking the owners of American shell companies and destroy the data it has already collected about them – moves that will make it easier for fentanyl traffickers and other transnational criminals to launder dirty money.
Those permanent changes, announced by the Financial Crimes Enforcement Network (FinCEN) this week, will also have repercussions for Canada’s law enforcement, border security and trade with the U.S.
First, some background: Shell corporations are businesses that exist purely on paper as they lack legitimate operations. Criminals routinely exploit these corporate entities to launder illicit profits because they can be used to access the banking system while hiding their true owners.
The Trump administration, however, argues that revealing the identities of the people controlling secret companies “would not be highly useful” to police. As a result, it is gutting the Corporate Transparency Act, which the U.S. Congress enacted in 2021 to combat money laundering.
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Never mind that one of the law’s chief architects was none other than Republican Marco Rubio, who now serves as U.S. Secretary of State. Don’t worry about it, “Little Marco.” You’re taking one for the team!
The Corporate Transparency Act paved the way for a beneficial-ownership database of millions of private businesses. It defined a beneficial owner as anyone who holds a stake of at least 25 per cent in a company or who has substantial control over it.
FinCEN, however, is now ending the requirement for U.S. companies to report their beneficial owners and purging all data about U.S. citizens who control domestic shells.
It gets worse, as it often does with the Trump administration.
Foreign companies will no longer be required to disclose when U.S. individuals set up an American shell corporation on their behalf.
There will also be no way to know whether U.S. citizens control foreign pooled investment vehicles registered stateside.
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Foreign entities will still be required to report beneficial ownership information for international individuals. That double standard, though, ignores the risks posed by U.S. citizens who either register anonymous shell corporations for their own nefarious purposes or do so for the benefit of foreign criminals.
Of the more than 32.5 million private companies in the U.S., FinCEN estimated that only 25,000 were foreign reporting companies in 2025. That is less than 0.1 per cent of the total.
An arm of the U.S. Treasury Department, FinCEN said the change in presidential administrations in early 2025 led to a reassessment of the ownership reporting rule.
This week, U.S. Treasury Secretary Scott Bessent called it “a victory for common sense” and small businesses alike.
“President Trump promised to cut red tape,” Mr. Bessent said, adding the changes won’t compromise national security.
Rubbish.
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The rollback of U.S. safeguards will also make it easier for criminals to launder money internationally, said Erica Hanichak, co-director of the FACT Coalition, a Washington-based anti-corruption group.
“We’re really concerned, particularly given the transnational threats that both the U.S. and Canada face with fentanyl trafficking and other issues, human trafficking, fraud and cyberscams,” Ms. Hanichak said in an interview.
“For each of these crimes, anonymous shell companies play a huge role in moving the illicit proceeds.”
A lack of beneficial-ownership transparency in the U.S. will also make it “much harder” for police in Canada to thwart national-security threats, she said, adding that illicit funds move across borders.
In Canada, some 70 per cent of all money-laundering cases involve the abuse of corporate entities, according to federal data.
The Carney government is urging provinces and territories to join a pan-Canadian corporate registry. Its goal of improving beneficial-ownership transparency was discussed at last month’s meeting of finance ministers in Charlottetown.
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A beneficial-ownership registry already exists for federally registered companies, but the vast majority of private businesses are incorporated at the provincial level.
Quebec is the only province with an operational corporate registry. Others, including British Columbia and Ontario, are working on their own databases. Still, a U.S. retreat could stall efforts to get holdout provinces (ahem, Alberta) on board.
Still, it would be naive for any province to emulate the U.S. on this issue, said Sasha Caldera, campaign director of the beneficial-ownership project at IMPACT, an Ottawa-based non-profit.
“If Canada tries to do this, the U.S. will then say, ‘We’re going to use this as extra leverage to pin you on trade,’” Mr. Caldera said.
As I’ve warned in previous columns, the proliferation of trade-based money laundering could provide a new justification for tariffs.
That brings us back to Mr. Trump’s fentanyl-linked emergency tariffs, which were struck down by the U.S. Supreme Court earlier this year.
Mr. Trump’s cognitive dissonance on combatting fentanyl trafficking isn’t the point. His goal isn’t fighting drug cartels. It’s putting the screws on Canada on trade.