Interim Final Rule on the Corporate Transparency Act?

 

On March 21st, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) published an interim final rule (the “March 21 Rule”) that:

• Narrows the beneficial ownership information (“BOI”) reporting requirements of the Corporate Transparency Act (“CTA”); and
• Extends the CTA’s BOI reporting deadline by 30 days.

FinCEN will accept comments on the March 21 Rule for 60 days and intends to issue a final rule this year.

The CTA’s Beneficial Ownership Information Reporting Requirements (“BOI Rule”) requires “reporting companies” to report information regarding their beneficial owners to a national corporate registry. The BOI Rule originally defined two types of reporting companies:

• Domestic reporting companies, which refers to legal entities created by the filing of a document with a secretary of state or any similar office of a U.S. State.
• Foreign reporting companies, which refers to legal entities formed under the law of a foreign country that have registered to do business in any U.S. State by the filing of a document with a secretary of state or any similar office of a U.S. State.

As originally drafted, the BOI Rule set forth 23 exemptions to the definition of a reporting company, including exemptions for registered investment advisers, certain exempt reporting advisers, qualifying pooled investment vehicles operated or advised by an exempt adviser, large operating companies, and subsidiaries of most, but not all, other categories of exempt entities.

Since its enactment, the BOI Rule has been subject to extensive legal challenges and, beginning in December 2024, conflicting federal court decisions enjoining and then reinstating the Rule’s enforcement. In response to these decisions, the Treasury Department published a series of updates:

• On February 19, FinCEN announced that enforcement of the BOI Rule would resume under a new, extended reporting deadline of March 21, 2025 for most reporting companies.

March 21 Rule: Exempts domestic reporting companies, and their beneficial owners, from the requirement to file initial BOI reports, or to update or correct previously filed BOI reports. Exempts foreign reporting companies, and their U.S. person beneficial owners, from the requirement to provide the BOI of any U.S. persons who are beneficial owners of the foreign reporting company. Retains the requirement for foreign reporting companies, and their beneficial owners (excluding U.S. persons), to report their BOI to FinCEN, while extending the deadline for those companies to file initial BOI reports, or update or correct previously filed BOI reports, until 30 days after the publication of the March 21 Rule in the Federal Register or 30 days after their registration to do business in the United States, whichever comes later.

Next Steps: Subject to further developments, the March 21 Rule eliminates BOI reporting requirements for most entities that previously qualified as in-scope reporting companies. Additionally, the March 21 Rule narrows the scope of information that will need to be reported for foreign reporting companies. As the BOI Rule remains the subject of multiple legal challenges, domestic and foreign reporting companies (as originally defined) should continue to monitor for further developments.

Finally, ASA joined the Main Street Partnership in a letter to Treasury Secretary Bessent applauding his department for issuing the interim final rule on March 21, 2025, which revises the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA). Per the letter, “this rule appropriately narrows the scope of entities required to report BOI by exempting domestic reporting companies and U.S. persons who are beneficial owners of foreign reporting companies. By doing so, the Department has alleviated substantial compliance burdens that would have disproportionately affected law-abiding Main Street businesses, while also shifting to a risk-based enforcement protocol that will ultimately strengthen the effectiveness of the CTA  Furthermore, the exemption of foreign reporting companies from having to report the BOI of any U.S. persons who are beneficial owners, and the exemption of U.S. persons from providing such information to foreign reporting companies, demonstrate a balanced consideration of privacy concerns and the practicalities of compliance.”

We believe these revisions will allow the Department to focus its resources on entities that pose genuine risks of money laundering and other illicit activities, thereby enhancing the effectiveness of our nation's financial crime prevention efforts without imposing undue burdens on legitimate businesses.