The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an interim final rule on March 21, officially removing the requirement for U.S. companies and individuals to report beneficial ownership information (BOI) under the Corporate Transparency Act (CTA).
FinCEN had made an earlier announcement of its intention to revise this rule and suspend enforcement of the BOI reporting requirement for domestic entities.
“With respect to the Corporate Transparency Act, not only will (the Treasury Department) not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either,” the original announcement read. “The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.”
In the interim final rule, FinCEN revises the definition of “reporting company” in its implementing regulations to apply only to “foreign reporting companies,” or those companies that are formed under the law of a foreign country and that have registered to do business in any U.S. state or tribal jurisdiction.
This move essentially exempts “domestic reporting companies,” or entities created within the U.S. and their beneficial owners, from obligations to report BOI to FinCEN under the CTA.
Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines, detailed below.
These foreign entities, however, will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.
Upon the publication of the interim final rule in the Federal Register, the following deadlines apply for foreign entities that are reporting companies:
- Reporting companies registered to do business in the United States before the date of publication of the interim final rule must file BOI reports no later than 30 days from that date.
- Reporting companies registered to do business in the United States on or after the date of publication of the interim final rule have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.
The move by FinCEN to narrow the scope of BOI reporting requirements to only apply to foreign entities has been praised by the likes of Secretary of the Treasury Scott Bessent, who declared the decision a “victory for common sense” that reins in “burdensome regulations.”