Alicia Nicholls
As Barbados’ Parliament debated and passed what will become the Beneficial Ownership Transparency and Register Act 2026, strengthening the country’s framework for corporate transparency to comply with its international financial regulations, the United States (US) was moving in the opposite direction. Just a week after the Barbados bill was passed, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) on August 14 brought into effect a final rule exempting US companies and persons from beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act.
FinCEN also announced that it intends to remove from its BOI database, “as much as practicable”, information that would not have been required had the new rules been in place from the beginning. This includes information relating to domestic reporting companies and US persons. However, reporting obligations remain for certain entities formed under foreign law and registered to do business in the United States, although those entities generally no longer have to report beneficial ownership information on US persons. The practical effect is to shift much of the burden of beneficial ownership transparency away from US domestic entities and onto foreign entities. This differential treatment may raise questions under the US’ commitments pursuant to the World Trade Organisation’s General Agreement on Trade in Services (GATS), including its national treatment obligations. A fuller examination of those issues, however, is beyond the scope of this article.
The main policy justification advanced for this shift is that collecting BOI from nearly all American small businesses imposes costs that are not justified by the information’s additional law enforcement value. It is therefore a regulatory burden with limited benefit. The Treasury characterises the revised system as a more targeted, risk-based approach. However, a May 2026 report by the US Government Accountability Office (GAO) estimated that the then proposed US domestic company exemption applies to more than 99 per cent of the entities previously required to report. It found that although most states collect some information about the officers, directors, managers or members of businesses operating within their borders, these persons are not necessarily the entities’ beneficial owners. Since what states collect varies considerably, GAO concluded that Treasury had not identified adequate actions to address the resulting gap in beneficial ownership information and recommended that it do so. Moreover, GAO also noted that this lack of transparency could make the US more attractive to criminals seeking to hide illegal activities. However, Treasury ignored this advice.
This development made me wonder about its compatibility with Financial Action Task Force (FATF) rules. Established in 1989 to tackle money laundering from drug crimes initially, FATF is the global standard-setting body for anti-money laundering, countering terrorist financing and countering proliferation financing (AML/CFT/PF) regulation as outlined in the FATF Recommendations.
Under Recommendation 24 and its interpretive notes and guidance, jurisdictions are required to ensure that competent authorities have timely access to adequate, accurate and up-to-date beneficial ownership information on legal persons. However, the FinCEN exemption does not automatically mean that the US is non-compliant with FATF Recommendation 24 since FATF permits jurisdictions to use different mechanisms to ensure timely access to reliable beneficial ownership information.The real test will be can US authorities, without comprehensive domestic BOI reporting, still obtain adequate, accurate and up-to-date information quickly enough through these now disparate sources? How effective will this new system be? That question is particularly timely as according to FATF’s assessment schedule, the plenary discussion for the US’ fifth round mutual evaluation report is scheduled for October 2026. The treatment of beneficial ownership under the US’ fifth round assessment will therefore merit close attention.
By contrast, Barbados knows that the FATF Recommendations, despite the nomenclature, are far from recommendations or merely soft law. It also knows all too well what non-compliance could mean for its reputation as a global business jurisdiction and the frictions that being listed could cause for businesses engaging in international transactions. Barbados is not a FATF member, but a member of the FATF Global Network by being a member of the Caribbean Financial Action Task Force (CFATF), one of nine FATF-style regional bodies. Following Barbados’ poor performance on its CFAFT fourth round mutual evaluation, FATF later placed Barbados under increased monitoring (the so-called “grey list”) in February 2020 until its removal in February 2024. Beneficial ownership information for legal entities was one of the action items Barbados had to address in order to exit the grey list.
The US decision consequently exposes a deeper asymmetry in global financial governance. Powerful states exercise considerable influence over the development of international standards but also possess greater political and economic space to recalibrate their own participation when domestic priorities change. Small, international financial centres like Barbados have considerably less room to manoeuvre.
This is not the first time the US has deviated from global financial transparency initiatives. In international tax transparency, the US conducts automatic exchanges of financial account information through its Foreign Account Tax Compliance Act (FATCA) framework rather than implementing the OECD’s Common Reporting Standard in the same manner as the more than 100 jurisdictions, including Barbados, exchanging under the CRS framework. Similarly, the US has substantially recalibrated its approach to the OECD/G20 global tax agreement. In January 2025, the Trump White House declared that commitments made by the previous administration under the OECD Global Tax Deal would have no force or effect in the US without congressional adoption. By January 2026, rather than simply adopting Pillar Two as originally envisaged, the US had secured a special “side-by-side” arrangement, allowing US-headquartered companies to remain subject to US global minimum taxes while being exempted from core Pillar Two rules.
These examples highlight a deeper asymmetry in global financial governance: powerful countries often have greater room to reinterpret, modify or retreat from international transparency commitments, while small states face considerably less policy space, particularly where their financial sectors depend on maintaining a reputation for compliance. Unlike the WTO system, FATF contains no comparable framework of special and differential treatment for developing countries. As a result, jurisdictions are expected to satisfy common standards despite significant differences in institutional capacity, financial resources and development constraints.
None of this is meant to suggest that Barbados should weaken its own beneficial ownership framework. After the experience under the FATF grey list and EU AML Blacklist, Barbadian policy makers and regulators are working hard to ensure that Barbados can demonstrate not just technical compliance, but also effectiveness with the FATF Recommendations so its upcoming CFATF mutual evaluation next year (2027) is a favourable one. A series of insightful articles authored by Barbadian AML expert, Louis Parris, in the local press eloquently highlights the stakes Barbados faces.
Moreover, in principle, strong corporate transparency serves Barbados’ own interests, including in protecting the reputation and credibility of both its domestic and global business sectors. Indeed, there is a good reason why beneficial ownership information is important. Anonymous and complicated corporate structures can facilitate money laundering, and predicate crimes like corruption and tax evasion. The harder question is who bears the responsibility and the cost of providing global financial transparency? These costs will be borne by small businesses in particular which are already drowning under an ever-increasing burden of reporting requirements to ultimately, if we are being honest, to satisfy international regulators and at the pain of hefty punitive measures.
If financial transparency is genuinely a global public good, its obligations cannot fall disproportionately on small jurisdictions with the least resources or power to shape the rules and the greatest vulnerability to the consequences of perceived non-compliance. The FinCEN decision to exempt US domestic companies from BOI reporting obligations raises once again larger questions about power in global financial governance, namely, who makes the rules, who has the policy space to retreat from them, and who is ultimately left holding the compliance bag.
Alicia D. Nicholls, B.Sc. MSc, LLB. is an international trade specialist, with a keen interest in global financial governance and is the founder of the Caribbean Trade Law & Development Blog: http://www.caribbeantradelaw.com.
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