Client Updates
On March 21, 2025, the Financial Crimes Enforcement Network ("FinCEN"), a bureau of the U.S. Treasury Department, issued an interim final rule to significantly narrow the reporting requirements under the Corporate Transparency Act (the "CTA"). FinCEN explained in the background to the interim final rule release that, in connection with the change in presidential administrations, there has been a reassessment of the balance between the regulatory burden imposed by the reporting requirements under the CTA and the usefulness of collecting the related beneficial ownership information.
Under the interim final rule, FinCEN has revised the definition of "reporting company" such that only entities previously defined as "foreign reporting companies" (i.e., entities formed under the law of a foreign country and registered to do business in a U.S. state or tribal jurisdiction) will be required to file beneficial ownership reports under the CTA. Entities previously defined as "domestic reporting companies" (i.e., entities formed in the U.S.), and their beneficial owners, will be exempt from reporting beneficial ownership information to FinCEN, including filing initial beneficial ownership reports, as well as updating and correcting previously filed reports.
In general, the interim final rule does not change the existing reporting requirements for foreign reporting companies. However, it does exempt foreign reporting companies from providing beneficial ownership information with respect to any U.S. person who is a beneficial owner. Therefore, foreign reporting companies that only have beneficial owners that are U.S. persons will be exempt from the requirement to report beneficial owners.
Foreign reporting companies registered to do business in a U.S. state or tribal jurisdiction before the date the interim final rules are published in the Federal Register will be required to file their initial beneficial ownership report no later than 30 days from that publication date. Foreign reporting companies registered to do business in a U.S. state or tribal jurisdiction after the date the interim final rules are published in the Federal Register will have 30 calendar days from their registration date to file an initial beneficial ownership report.
FinCEN is accepting comments on the interim final rule until 60 days after publication in the Federal Register and intends to issue a final rule later this year.
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