FinCEN Exempts Domestic Entities and U.S. Persons from CTA Reporting Requirements
On March 26, the Financial Crimes Enforcement Network (FinCEN) published an interim final rule removing the requirement that U.S. companies and U.S. persons report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act (CTA). FinCEN, with the written concurrence of the U.S. Attorney General and the U.S. Secretary of Homeland Security, determined that the reporting of BOI by domestic reporting companies and their beneficial owners “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.”
The interim final rule exempts all domestic reporting companies and their beneficial owners from the requirement to file initial BOI reports or to update or correct previously filed BOI reports by excluding domestic companies from the scope of the term “reporting company.” The exemption applies to any entity that is a corporation, limited liability company or other entity created by the filing of a document with a secretary of state or similar office under the law of any State or Indian Tribe.
The interim final rule also exempts foreign reporting companies and their U.S. person beneficial owners from providing BOI of any U.S. persons who are beneficial owners of the foreign reporting company. Foreign reporting companies with only beneficial owners that are U.S. persons are exempt from the requirement to report BOI.
In addition, the interim final rule revises a special rule for foreign pooled investment vehicles to exempt the entities from reporting the BOI of U.S. persons who exercise substantial control over the entity.
Foreign reporting companies registered in the United States before March 26, 2025, must file BOI reports no later than 30 days from March 26. Foreign reporting companies registered to do business in the United States on or after March 26, 2025, have 30 days to file their initial BOI report after receiving notice that their registration is effective.
The interim final rule is effective immediately. However, FinCEN is accepting comments to the rule no later than May 27 and will issue exemptions, as appropriate, in light of these comments. FinCEN intends to issue a final rule this year.
Phelps will continue monitoring developments related to the CTA and its implementing regulations. Please contact Hal West, Trevor J. Haynes or any member of Phelps’ Business team if you have questions or need advice and guidance.
