New FinCEN Rule Exempts US Companies from Reporting Requirements
On March 21st, the Financial Crimes Enforcement Network (FinCEN), Treasury, issued interim final rules that eliminate the requirement of U.S. entities to report the Beneficial Ownership Information (BOI) reporting requirements as required by the Corporate Transparency Act (CTA). This represents the complete reversal of rules previously issued by FinCEN under the CTA.
The CTA was enacted by Congress January 1, 2021, as part of broader money laundering legislation and intended to assist law enforcement to combat money laundering, terrorism financing and other financial crimes. As initially promulgated, FinCEN rules required, among other things, all U.S. entities formed by filing organization documents with a State (e.g., corporations, LLCs, LPs) to file BOI reports identifying owners of twenty-five percent or more or having certain control over the entity. The rules were heavily criticized as overbroad, (e.g., including Homeowner’s Associations, not typically considered vehicles for money laundering) complex (especially dealing with tiered entities) and ambiguous (the definition of “controlled persons”) and was demanding information the Treasury already had through partnership returns and K-1 filings.
While filing requirements were heavily publicized during 2024, with the initial deadline for filing for companies formed before 2024 set on December 31, 2024, and substantial penalties for failure to timely file. The filing deadline was stopped and started multiple times due to court challenges against the legislation. Several courts found the legislation unconstitutional while other courts found otherwise. For most of 2025 the rules have been put on hold and, most recently, FinCEN only requested voluntarily filing. However, the new rules change dramatically. Under this interim final rule, the BOI reporting requirements now apply only to entities previously defined as “Foreign Reporting Companies,” meaning companies forms in a foreign jurisdiction. Entities previously defined as “Domestic Reporting Companies,” meaning companies formed in the United States, are “exempted from the reporting requirements and do not have to report BOI to FinCEN, or update or correct BOI previously reported to FinCEN.” While the reporting requirement continues for Foreign Reporting Companies, the new rule extends the deadline to thirty days from publication of the new rule and also exempts Foreign Reporting Companies from having to report the BOI of any U.S. persons who are beneficial owners of the Foreign Reporting Company.
It appears that FinCEN is just closing down the whole BOI reporting regime and the expectation is that any further such requirements will have to come from additional action from Congress to either amend the CTA or take other action to force broader enforcement of the statute. Note, that the impetus for the CTA and the reporting requirements was international pressure for the U.S. to adopt greater transparency rules matching those of various international bodies. The U.S. has long participated in the Financial Action Taskforce (FATF) in which other nation participants maintain databases of their companies and ownership to which U.S. law enforcement and intelligence agencies currently have access. The U.S. can expect continued pressure to adopt similar rules and does not want to lose access to that information so, while this “interim of final” rule essentially guts the reporting requirement for U.S. companies this may not be the end of reporting rules although it will likely be some time Congress can amend or restructure the requirements.
Note also, that notwithstanding Treasury’s new rule suspending filing requirements under the CTA, unless and until amended by Congress there is still a law in place requiring such filing and it is not at all clear that Treasury’s rulemaking authority extends to exempt all domestic entities. For now, however, clients with U.S. formed entities may no longer have any BOI filing requirements under the CTA nor a requirement to update reports already filed.