On March 21, 2025, the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule (IFR) that significantly changes the scope of beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA). As we previously reported, FinCEN has suspended enforcement of the CTA.
Key Changes
- Exemption for U.S. Entities: The IFR removes the requirement for U.S. companies and U.S. persons to report BOI to FinCEN. This means that all entities created in the United States, including those previously categorized as “domestic reporting companies,” are exempt from BOI reporting obligations.
- Definition of Reporting Company: The definition of a “reporting company” has been revised to apply only to entities formed under the law of a foreign country and registered to do business in any U.S. state or tribal jurisdiction. These entities, formerly known as “foreign reporting companies,” must still report BOI unless they qualify for an exemption.
- Reporting Requirements for Foreign Entities:
- Deadlines: Foreign entities registered to do business in the U.S. before March 26, 2025, must file BOI reports by April 25, 2025. Those registered on or after March 26, 2025, have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.
- Exemption for U.S. Beneficial Owners: Foreign entities are not required to report U.S. persons as beneficial owners, and U.S. persons are not obligated to report BOI for foreign entities in which they hold ownership.
Implications
- Reduced Compliance Burden for U.S. Entities: The exemption from BOI reporting significantly reduces the compliance burden for U.S. companies and individuals, aligning with efforts to streamline regulatory requirements and support economic growth.
- Continued Scrutiny of Foreign Entities: Foreign entities registered in the U.S. must continue to comply with BOI reporting requirements, emphasizing the ongoing focus on curbing anti-money laundering efforts involving foreign entities.
- Future Developments: FinCEN is accepting comments on the interim final rule and plans to issue a final rule later this year. Clients should monitor these developments closely, as future regulations may reimpose reporting requirements on U.S. companies with foreign owners presenting anti-money laundering risks.
Next Steps
- U.S. Entities: No longer need to file BOI reports or update previously filed reports.
- Foreign Entities Doing Business in the U.S.: Ensure compliance with new deadlines and reporting requirements, focusing on non-U.S. beneficial owners. Foreign businesses entering the U.S. market may be able to avoid having to report BOI if they operate through a U.S. entity.
- Monitoring Developments: Stay informed about potential changes to the CTA and its implementing regulations.
Conclusion
The interim final rule marks a significant shift in BOI reporting requirements, offering relief to U.S. entities while maintaining scrutiny over foreign entities. As FinCEN continues to refine these regulations, it is crucial for affected parties to remain vigilant and adapt to any future changes.
The CommLaw Group can help!
Contact us for assistance in navigating beneficial ownership information reporting obligations. We can help you determine the precise information your (foreign) organization must disclose, identify any applicable exceptions, and guide you through the process of filing beneficial ownership information reports. Our team is ready to support you in ensuring full compliance with all relevant reporting requirements.
Jonathan S. Marashlian – Tel: 703-714-1313 / E-mail: jsm@CommLawGroup.com
Michael P. Donahue — Tel: 703-714-1319 / E-mail: mpd@CommLawGroup.com
Diana James – Tel: 703-663-6757 / E-mail: daj@CommLawGroup.com
