Whitehouse, Grassley Unveil GAO Report Highlighting Heightened Fraud Risk by Opaque Shell and Front Companies

Treasury Department's final rule that dismantled key element of bipartisan Corporate Transparency Act is blocking insight into beneficial owner information of companies applying for federal awards

Washington, DC - U.S. Senator Sheldon Whitehouse (D-RI), co-chair of the Senate Caucus on International Narcotics Control, and Senator Chuck Grassley (R-IA), former co-chair of the Caucus, announced the release of a Government Accountability Office (GAO) report that found that hundreds of billions of taxpayer dollars remain vulnerable to fraud enabled by opaque corporate structures, almost six years after Congress passed the Corporate Transparency Act and directed the General Services Administration (GSA) to maintain a database that contains federal contractors' beneficial ownership information.

Despite passage of the bipartisan Corporate Transparency Act (CTA), there is still no central repository of beneficial ownership information on businesses that receive federal awards after efforts to address beneficial ownership-related risks have been stymied by the Department of the Treasury's recently finalized rule gutting the CTA's beneficial ownership reporting requirements. The GAO analysis reveals that GSA intended to leverage Treasury's registry to develop the contractor database, but that source is now of minimal use after Treasury exempted 99 percent of the entities that were previously required to report.

"Senator Grassley and I worked for years to pass the Corporate Transparency Act to crack down on fraudsters, cartels, and criminals who steal and stash dirty money in shady shell companies," said Whitehouse. "This new report shows that the Treasury Department's shortsighted decision to gut the CTA leaves hundreds of billions of federal dollars at real risk to fraudsters. The Trump administration should reverse course and fully implement the law as envisioned by Congress if they are remotely serious about uncovering and eliminating fraud."

"The bipartisan Corporate Transparency Act was designed to crack down on anonymous shell corporations engaged in illicit finance by filling a gap in the collection of beneficial ownership information. The latest report from the Government Accountability Office demonstrates how this bipartisan bill's reporting requirements would also help the government weed out hundreds of millions of dollars in fraud in federal programs and contracts," Grassley said. "This report underscores how important it is for the U.S. government to fully implement the Corporate Transparency Act's beneficial ownership reporting requirements and use all available tools to protect Americans and crack down on illicit financial schemes."

Whitehouse and Grassley asked GAO to provide insights on what information is available from various federal, state, and commercial data sources to identify beneficial owners, and how they can be used to combat fraud risks in federal awards. The GAO report found that illicit actors hide their beneficial ownership in multiple ways to fraudulently access federal awards, such as contracts, grants, and Medicare payments, and to evade payment on taxes. GAO's review revealed tactics illicit actors have used, such as using stolen identities, shell companies, professional enablers, and pass-through billing schemes to hide ownership.

The GAO report found several explosive examples of fraud linked to shell companies and weak beneficial ownership disclosure rules. In June 2025, the Department of Justice indicted several individuals allegedly associated with a Russia-based transnational criminal organization , who allegedly exploited weak disclosure requirements in beneficial ownership reporting to try to defraud Medicare and private health care companies of over $10 billion, ultimately receiving $941 million. From July 2019 through January 2023, three purported hospice owners stole identities to register shell companies and defrauded Medicare for nearly $16 million. And in a third case, from June 2018 through September 2018, a foreign-based scam ring with U.S.-based conspirators directed legitimate federal contractors to a fake government website to steal their identities, causing the government to misdirect $23.5 million to the fraudsters.

The CTA was designed to play an important role in protecting national security and public safety by providing law enforcement and national security officials with the names of the true owners ("beneficial ownership information") of U.S. corporations and other legal entities. This information facilitates the government's efforts to combat various forms of illicit finance carried out through shell and front companies.

In March 2025, the Treasury Department announced that it would not enforce the CTA's beneficial ownership information reporting rule when it comes to U.S. citizens or domestic reporting companies, and would issue a new proposed rulemaking that would narrow the scope of the rule to foreign reporting companies only. A few weeks later, the Department published an interim final rule eliminating reporting requirements for more than 99 percent of corporations and LLCs that were previously required to report, despite those entities posing significant risks of illicit finance activity. In August 2026, Treasury's final rulemade permanent the sweeping exemptions and mandated the deletion of all beneficial ownership information data that domestic companies had already submitted.

Whitehouse and Grassley were the original sponsors of the TITLE Act, the precursor to the Corporate Transparency Act. The CTA also passed as part of the FY2021 National Defense Authorization Act after more than a decade of bipartisan congressional deliberation, and was supported by a wide range of government, anti-corruption groups, human rights organizations, faith communities, financial institutions, and real estate organizations.

Read the full report here.