But has the final rule brought finality to the topsy-turvy saga of the CTA? The answer to this question is not yet clear.
Has the tumultuous, nearly five-year journey of the Corporate Transparency Act (CTA) finally come to an end? In 2021, Congress adopted the CTA with the stated purpose of curbing the use of anonymous shell companies to foster and facilitate money laundering, fraud and sanctions evasion by requiring continued and detailed disclosure of the beneficial ownership information of virtually every corporation, limited liability company or similar entity registered to do business in a U.S. state, territory or tribal jurisdiction ranging from proverbial mom-and-pop stores to multinational enterprises. The task of CTA enforcement was assigned to the Financial Crimes Enforcement Network of the Treasury Department (FinCEN).
When the enormity of the mandated reporting program became apparent following the adoption by FinCEN of its initial reporting regulations on September 30, 2022, with an effective date of January 1, 2024, an ever growing crescendo of objections began to be heard in both the political and judicial arenas. The objections were based on a broad variety of reasons such as privacy concerns, compliance costs and assertions of unconstitutionality. In the face of these objections, FinCEN issued what it denominated as an interim final rule to be effective on March 26, 2025. Among other things, the interim final rule restricted the application of the CTA’s beneficial ownership reporting requirements to only foreign entities that have formally registered in the United States and indicated that FinCEN would promulgate a final rule to replace the interim final rule at a later date.
That later date finally arrived nearly 17 months later on August 14, 2026, with the publication of a final rule to replace the interim final rule. In doing so, FinCEN continued and finalized concepts announced in the interim final rule and provided some new guidance.
The final rule importantly:
- Removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information to FinCEN;
- Continues to require that foreign entities that are reporting companies report to FinCEN beneficial ownership information for foreign individuals;
- Exempts U.S. persons who have previously obtained FinCEN IDs from any obligation to update or correct the information that they originally provided to FinCEN when they obtained their FinCEN IDs;
- Eliminates the requirement to report U.S. person “company applicants” (i.e., the U.S. individuals who helped companies register to do business in the United States; foreign persons who are company applicants must be reported);
- Exempts foreign pooled investment vehicles registered in the United States from reporting the beneficial ownership information of a U.S. person in control of the investment vehicle; and
- Confirms that FinCEN will delete previously provided information about any individual (such as a company applicant, beneficial owner or recipient of a FinCEN ID) that FinCEN reasonably believes is a U.S. person.
But has the final rule brought finality to the topsy-turvy saga of the CTA? The answer to this question is not yet clear. The CTA as originally adopted by Congress remains in effect and has not been amended or repealed. A number of outstanding and potential legal challenges to the CTA remain unresolved, and new ones may be on the horizon, including assertions that the final rule does not properly comport with the requirements of the CTA as adopted by Congress and strays beyond the regulatory authority of FinCEN. Various law enforcement agencies—both domestic and foreign—can be expected to argue for a return to the stricter standards of the original CTA and its original guidance. Furthermore, a new Congress or a new administration might choose to alter the approach taken by FinCEN in the final rule. The final rule itself likely will create some new questions of interpretation and implementation.
Accordingly, both U.S. and foreign reporting companies and their U.S. and foreign beneficial owners are well-advised to continue to monitor CTA developments even if they are exempt from beneficial ownership reporting under the final rule. In the immortal words of baseball hero Yogi Berra: “It ain’t over till it’s over.” And no one can say with certainty at this point that the new final rule has brought finality to the CTA story.
About Duane Morris
Duane Morris is actively monitoring developments regarding the CTA and issuing Alerts on the topic. To receive future Duane Morris Alerts on the CTA, please register for our CTA mailing list. Duane Morris will provide advice to clients regarding CTA compliance only when explicitly engaged to do so in writing.
For More Information
If you have any questions about this Alert, please contact Thomas R. Schmuhl, Jocelyn Margolin Borowsky, Joel N. Ephross, Hope P. Krebs, Lee J. Potter Jr., any of the attorneys in our Corporate Transparency Act Group, the attorney in the firm with whom you are regularly in contact, or Michael A. Gillen or any of the professionals in the Tax Accounting Group.
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