PROVIDENCE, R.I. — Rhode Island Attorney General Peter F. Neronha and the attorneys general of 19 other states and the District of Columbia sued the Trump administration, seeking to block a federal rule that exempts most businesses from the Corporate Transparency Act, according to Neronha's office.

The 2021 law requires corporations, limited liability companies and similar entities to report identifying information about their owners to the Treasury Department's Financial Crimes Enforcement Network, known as FinCEN. The office said the law was meant to stop shell companies from hiding financial transactions from police and prosecutors, and created a database used to trace illicit money, recover stolen assets and uncover bribes.

According to the attorney general's office, FinCEN issued a rule on March 26, 2025, that exempted 99.9% of businesses from the reporting requirements, which the office said made the law nearly useless. On Aug. 14, FinCEN made those exemptions permanent in a final rule. The office said FinCEN also committed to deleting, by Feb. 10, 2027, all information previously reported by U.S. companies and people who are no longer required to report.

The states allege the rule violates the Administrative Procedure Act, the separation of powers and the Take Care Clause of the U.S. Constitution. They are asking a court to declare the rule unlawful and vacate it, and to bar FinCEN from carrying out the data purge.

Maine and Massachusetts are among the states that joined the lawsuit. The others are Arizona, California, Colorado, Delaware, Illinois, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Virginia, Washington and Wisconsin, along with the District of Columbia.

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