By, John M. Goralka, Esq. (sourced from FinCEN announcement)
Sacramento, CA
On March 21, 2025, the U.S. Department of the Treasury announced the formal publication of the Financial Crimes Enforcement Network (FinCEN) interim final rule in the Federal Register. This rule significantly alters the reporting requirements under the Corporate Transparency Act (CTA) by removing the obligation for U.S. companies and individuals to report beneficial ownership information (BOI) to FinCEN. Instead, the scope of the rule has been narrowed to apply exclusively to foreign reporting companies. The interim final rule became effective immediately upon publication, and FinCEN is currently accepting public comments with the intention of finalizing the rule later this year.
This regulatory change reflects the Treasury Department’s broader efforts to reduce compliance burdens on American businesses. U.S. Treasury Secretary Scott Bessent emphasized the importance of this initiative, stating, “It is important to rein in burdensome regulations to the benefit of hard-working American taxpayers and small businesses. As we continue to re-leverage the private sector and de-leverage the government, we are reviewing all regulations to ensure they are fit-for-purpose, in furtherance of our ambitious economic growth agenda on behalf of the American people.”
The announcement follows a prior decision by the Treasury Department on March 2, 2025, to suspend enforcement of the CTA. This suspension was implemented to address concerns raised by stakeholders regarding the complexity and potential overreach of the reporting requirements. The interim final rule represents a significant step in addressing these concerns while maintaining a focus on transparency and accountability for foreign entities operating within the United States.
On January 1, 2021, Congress enacted into law the CTA as part of the broader Anti-Money Laundering Act of 2020. Section 6403 of the CTA, among other things, amends the Bank Secrecy Act (BSA) by adding a new section 5336, Beneficial Ownership Information Reporting Requirements, to subchapter II of chapter 53 of title 31, United States Code. This section established new BOI reporting requirements for many corporations, limited liability companies, and other similar entities operating in the United States. The CTA excludes from that general definition, however, specified categories of businesses. The CTA also authorizes the Secretary of the Treasury (Secretary) to exempt any other “entity or class of entities” for which the Secretary, with the written concurrence of the Attorney General and the Secretary of Homeland Security, has, by regulation, determined that “requiring beneficial ownership information from the entity or class of entities . . . would not serve the public interest” and “would not be highly useful in national security, intelligence, and law enforcement agency efforts to detect, prevent, or prosecute money laundering, the financing of terrorism, proliferation finance, serious tax fraud, or other crimes.” In addition, section 5318(a)(7) of the BSA provides that the Secretary may make appropriate exemptions from a requirement in the BSA or regulations prescribed under the BSA. Taken together, these provisions authorize the issuance of regulations that may provide additional exemptions from the requirements of the CTA.
The CTA requires the Secretary to prescribe regulations to implement the CTA's reporting requirements. For most reporting companies, the CTA authorized the Secretary to allow up to two years from the regulation's effective date for reporting companies to file their initial BOI reports. The Secretary has delegated these and other CTA-implementing responsibilities to FinCEN, a bureau of the Department of the Treasury (Treasury).
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On September 30, 2022, FinCEN published the Beneficial Ownership Information Reporting Requirements final rule (Reporting Rule), implementing the CTA's reporting requirements (31 U.S.C. 5336(b)). The Reporting Rule became effective on January 1, 2024, and is codified in FinCEN's regulations at 31 CFR 1010.380. Section 1010.380 requires certain corporations, limited liability companies, and other similar entities (reporting companies) to report certain identifying information about the reporting companies themselves, the beneficial owners who own or control them, and, for companies created on or after January 1, 2024, the company applicants who form or register them.
Section 1010.380 previously required domestic reporting companies and foreign reporting companies created or registered to do business in the United States before the rule's effective date of January 1, 2024, to file initial BOI reports with FinCEN by January 1, 2025, one year after the effective date of the regulations. Domestic reporting companies created in 2024 and those foreign reporting companies registered to do business in the United States in 2024 had 90 days to file their initial BOI reports with FinCEN. Starting on January 1, 2025, section 1010.380 provided all reporting companies created or registered on or after that date with 30 days to file their initial reports.
The January 1, 2025, deadline previously established in FinCEN's regulations has changed in light of litigation challenging the CTA. In two cases, district courts issued universal orders that preliminarily enjoined FinCEN from implementing and enforcing the CTA and the Reporting Rule or stayed the effective date of section 1010.380 on a nationwide basis.First, on December 3, 2024, in Texas Top Cop Shop, Inc. v. Bondi, the U.S. District Court for the Eastern District of Texas, Sherman Division, issued an order that preliminarily enjoined the government from enforcing the CTA and stayed its implementing regulation's reporting deadlines. The government appealed and separately sought a stay of the district court's order pending that appeal, and on January 23, 2025, the Supreme Court granted a stay pending appeal of that order. Second, on January 7, 2025, in Smith v. U.S. Department of the Treasury, the U.S. District Court for the Eastern District of Texas, Tyler Division, issued a similar preliminary order that prevented the government from enforcing the CTA against the plaintiffs and stayed the effective date of the implementing regulation during the pendency of that litigation.The government appealed and sought a stay of this order, which the district court granted on February 18, 2025. The district court's stay of its order lifted the last remaining nationwide order preventing FinCEN from implementing and enforcing the CTA and section 1010.380.
Recognizing that the reporting deadlines set by section 1010.380 for many companies had already passed while those deadlines were stayed by court order and that companies would need additional time to comply, FinCEN extended the reporting deadlines for most reporting companies until March 21, 2025. In addition, FinCEN announced that during the 30-day extension period, it would “assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.” On March 2, 2025, Treasury announced the suspension of enforcement of the CTA against U.S. citizens, domestic reporting companies, and their beneficial owners, and Treasury further announced its intent to engage in a rulemaking to narrow the Reporting Rule to foreign reporting companies only.
