The Treasury Department is ending enforcement of a rule that sought to root out money laundering through shell companies, a noted problem in commercial real estate.

The agency said it won't enforce any penalties or fines against U.S. citizens or domestic companies from the beneficial ownership information reporting rule of the Corporate Transparency Act, according to a Sunday evening announcement.

Instead, the Treasury Department will issue a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies, the department said in the release. The Financial Crimes Enforcement Network created the rule in 2022, requiring most small businesses, corporations, limited liability companies and other entities to disclose ownership information starting in 2024.

“This is a victory for common sense,” Treasury Secretary Scott Bessent said in the release. “Today’s action is part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy.”

President Donald Trump praised the announcement on his Truth Social network, saying the “Biden rule has been an absolute disaster for Small Businesses Nationwide” and calling it “outrageous and invasive.”

Former Treasury Secretary Janet Yellen and other officials previously estimated the regulatory burden would cost about $85 per business. The rule was intended to benefit law enforcement officials in tracking down criminals, including money launderers, The Associated Press reported.

Money laundering has been a persistent issue in U.S. real estate. More than $2.3B was illegally laundered through U.S. real estate transactions between 2015 and 2020, according to a study of more than 100 cases by think tank Global Financial Integrity.

More than 30% of that money was laundered through commercial real estate.

Ian Gary, executive director of the government and business transparency advocate organization Fact Coalition, said on X that shell companies are a favorite tool of “fentanyl traffickers, money launderers, and tax cheats.”

“With one tweet, this Administration has contradicted 15 years of bipartisan work by Congress to end the scourge of anonymous shell companies,” Gary said in his post.

The rule required most companies with fewer than 20 employees to report beneficial owners' names, birth dates, addresses and a tax or financial identification number to a nonpublic database managed by FinCEN. Beneficial owners were defined as those with substantial control over a reporting company and/or those who owned and controlled at least 25% of the reporting company’s interests.

The rule went into effect on Jan. 1, 2024, along with the enforcement of the anti-money laundering statute known as the Corporate Transparency Act. The act was passed in December 2020 as part of the national defense spending bill. FinCEN posted a notice of proposed rulemaking a year later.

Existing companies had a year to meet the disclosure requirement, and companies created after Jan. 1, 2024, had 30 days.

The rule was expected to impact at least 32 million companies, the AP reported. More than 100,000 businesses filed ownership information in the first week of 2024.