After a slow start, the Corporate Transparency Act (“CTA”) and its companion, the Beneficial Ownership Information Report (“BOIR”), appear to have fizzled out for most companies. The BOIR reporting requirement was intended to extend the Anti-Money Laundering Act’s efforts to weed out opportunities for criminals, Russian oligarchs, terrorists, and other bad actors from funding illicit activities by hiding and moving money through anonymous shell companies and other corporate structures here in the United States.
The CTA originally required both domestic reporting companies and foreign reporting companies to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (“FinCEN”), a division of the U.S. Department of the Treasury (“Treasury”). The BOIR requires the identity of all individuals who exercise “substantial control” over a reporting company or own or control at least 25% of the ownership interests of the reporting company. While there were originally twenty-three exemptions to the BOIR reporting requirement, those exemptions would not benefit many small legitimate companies, including homeowner and condominium owner associations, mom-and-pop type establishments, and other small businesses.
Originally passed into law on a veto override on January 1, 2021, it was not until September 30, 2022, that a BOIR requirements final rule was published in the Federal Register. That rule, however, was not effective until January 1, 2024.
Two Texas court cases issued nationwide injunctions that preliminarily enjoined the federal government from enforcing the CTA and stayed its BOIR reporting deadlines on the basis of constitutional issues with the CTA legislation and enforcement regulations. In both cases, the federal government appealed, resulting in the first case’s injunction order being stayed by the Supreme Court on January 23, 2025. The second court stayed enforcement of its injunction on February 18, 2025, after appeal by the government. The stays of these injunctions meant that the government could enforce the CTA and BOIR.
With the nationwide injunctions stayed while the courts continued with proceedings addressing the constitutional issues, the reality was that the reporting deadlines for many companies had already passed. FinCEN initially extended the reporting deadline to March 21, 2025 for most reporting companies. On March 2, 2025, the Treasury issued a press release advising that it would not enforce any penalties or fines associated with the BOIR rule under existing regulatory deadlines and it would not enforce any penalties or fines associated with the BOIR against U.S. citizens, domestic reporting companies, or their beneficial owners. The Treasury also stated that it would be issuing proposed rulemaking that would narrow the scope of the BOIR rule to only foreign reporting companies.
Consistent with this announcement, on March 26, 2025, Treasury’s FinCEN published an interim final rule “BOIR Requirement, Revision and Deadline” (the “IFR”) in the Federal Register. The IFR accomplishes three main objectives:
1. Exempts domestic reporting companies from having to file a BOIR;
2. Exempts foreign reporting companies from having to report the beneficial ownership information of any U.S. persons; and
3. Exempts U.S. persons from having to provide personal information to foreign reporting companies.
The IFR also removes the requirement that companies and their beneficial owners have to update or correct previously filed BOIRs. These changes were accomplished, in part, by removing the definition of “domestic reporting company” from the CTA.
FinCEN also added an exemption to the list of already exempted reporting entities to now include “any entity that is: (A) a corporation, limited liability company, our other entity; and (B) created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe.”
However, with this additional exemption, it appears that a non-U.S. person could form an entity in the U.S. and avoid having to identify themselves to FinCEN, thereby arguably defeating the objective in passing the legislation creating the CTA and the BOIR requirement in the first place.
Foreign reporting companies are still obligated to file a BOIR, albeit without the requirement to identify any U.S. persons as beneficial owners.
While the IFR clarifies that domestic reporting companies have no further obligation to file a BOIR, the comment period for the IFR does not close until 60 days from the initial publication date in the Federal Register. It will take a number of months for Treasury to consider the comments once received and then issue a final rule which should occur late in 2025 or early 2026.
For those who may still have questions regarding the Corporate Transparency Act, the Beneficial Ownership Information Report requirements, or other corporate compliance matters, please contact the corporate attorneys at Jenkins & Kling, P.C., including:
David Weiss at 314/561-5078 or at [email protected]
Mary Grimes at 314/561-5086 or at [email protected]
Jennifer Beasley at 314/721-2525 or [email protected]