February 27, 2026

Warren, Van Hollen, Merkley, Shaheen, Luján, Kim, and Wyden: Treasury Fails to Answer Why Trump Administration Made It Easier for Drug Cartels to Launder Millions

Senators release new response from Treasury ignoring basic questions about its decision to gut a landmark bipartisan law meant to crack down on abuse of shell companies by criminals and adversaries

Washington, DC – U.S. Senators Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, Chris Van Hollen (D-MD), Jeff Merkley (D-OR), Jeanne Shaheen (D-NH), Ben Ray Luján (D-NM), Andy Kim (D-NJ), and Ron Wyden (D-OR) released the following statement onTreasury’s response to a November inquiry demanding answers about its gutting of the bipartisan Corporate Transparency Act (CTA):

“This empty response only underscores how the Trump Administration has kneecapped our country’s efforts to crack down on money laundering through shell companies in the United States. The Treasury Department refused to say whether it even analyzed how gutting the bipartisan Corporate Transparency Act would make it easier for terrorists, drug cartels, and criminals to move money through the U.S. financial system. The Trump Administration wants to be seen as ‘raising the alarm’ on issues like Chinese money laundering networks—but in reality, it’s taking away tools that law enforcement could use to disrupt the massive laundering operations that help cartels and hurt families.”

An overwhelming bipartisan majority in Congress passed the CTA to give law enforcement information about the true owners of shell companies and other shadowy corporate structures exploited by terrorists, criminals, and foreign adversaries to launder money and fund their activities. Treasury claimed in its response that it is “using all the tools at its disposal” to fight crime, but—shortly after an Elon Musk tweet promising to look into the CTA in March 2025—it exempted all U.S.-registered companies from having to provide statutorily required information to law enforcement.

In November, noting that Treasury has raised alarm about Chinese money laundering networks without emphasizing that these networks use U.S. shell companies to launder money for cartels, Senators asked for basic information about the Trump Administration’s decision to gut the CTA. For example, Senators requested a copy of any analysis about how narrowing the reporting requirements in the law would affect the ability of Chinese money laundering networks to illicitly access to the U.S. financial system and engage in criminal activity. They asked for any similar analysis for how the decision facilitates the activities of drug cartels, human trafficking networks, terrorists, foreign adversaries, scam artists, and other bad actors. But Treasury provided no meaningful response.

New warnings in the wake of Treasury’s decision highlight that gutting the CTA makes it easier for criminals and adversaries to move money through the U.S. financial system.

It was already well-known that the United States lags other countries in combating criminal and foreign adversary use of shell and front companies, including by Sinaloa cartel operatives, Iranian sanctions evaders, and those stealing technology for China’s military.

Yet, in the months since the Trump Administration’s rollback alone, there have already been multiple indications that Treasury’s decision is a mistake:

Drug cartels and fentanyl

  • The Daily Caller said: “Trump Admin May Have Accidentally Empowered Cartels To Flood America With Fentanyl, Republican Legal Experts Warn.”
  • The Trump Administration itself published several documents showing that Chinese money laundering networks use shell and front companies to launder drug proceeds and other illicit funds for drug cartels. In just onecase, “‘law enforcement identified more than 100 shell companies . . . used to launder at least $77 million in narcotics proceeds.’ These companies were allegedly connected to the network of a Chinese national ‘seen as a key link between Mexican cartels and Chinese chemical companies in sourcing the precursor chemicals for fentanyl’ and ‘vital in converting drug funds into cryptocurrency.’”

Iran sanctions evasion

  • Treasury published an analysis criticizing three foreign jurisdictions for having “opaque corporate registries” that Iran exploits—while simultaneously gutting corporate transparency here in the United States, where Iranian sanctions evaders have been known to operate.

Fraud

Sex trafficking

  • New reports indicate that Jeffrey Epstein, already known to have useddozens of shell companies, exploited U.S. Virgin Islands-registered shell companies to facilitate sex trafficking after bank officials raised concerns about his constant cash withdrawals. Secretary Bessent’s decision to roll back enforcement of the CTA means shell companies based in the U.S. Virgin Islands can stay anonymous.

Organized and transnational crime

  • The Financial Action Task Force issued a new warning that shell companies provide criminals with a “getaway car” to evade law enforcement.
  • Law enforcement groups came out against Treasury’s decision, with the National Narcotic Officers’ Associations’ Coalition stressing, “It is the criminal enterprises—drug traffickers, money launderers, and their financial enablers—who stand to gain if this law is weakened.”
  • DOJ charged a Venezuelan national for laundering $2.8 billion using U.S. shell companies and Tether cryptocurrency, uncovering the crime through the use of confidential informants who heard the suspect bragging that, if the FBI were to visit one of his companies, they would find only “A Twinkie and a bag of popcorn.”

The CTA didn’t require onerous paperwork. It instead required basic identifying information about true owners—name, address, birthdate, a government identification number, and a picture of the corresponding physical ID. The American people support commonsense steps to address significant risks to their security.

Indeed, surveys of the American people show “overwhelming” support for the CTA, with 81 percent of respondents agreeing that “(a)sking some small businesses to do 20 minutes of paperwork identifying their true owner is a small price to pay for keeping our communities safe from drug trafficking, terrorist financing, and other financial crimes.”

###