Consistent with the US Department of the Treasury's ("Treasury") March 2, 2025, announcement, on March 21, 2025, Treasury's Financial Crimes Enforcement Network ("FinCEN") issued an interim final rule ("Interim Final Rule") narrowing the scope of reporting required under the Corporate Transparency Act and its implementing regulations (collectively, the "CTA")1 to exclude reporting from US entities and US persons.2 The Interim Final Rule is subject to comments but is effective immediately upon publication in the Federal Register. Comments on the Interim Final Rule are due 60 days from its publication and it may take several more months after that for FinCEN to issue a final rule.
The Interim Final Rule makes four important changes to the CTA and its beneficial ownership information ("BOI") reporting requirements:
- Domestic Reporting Companies. Under the Interim Final Rule, entities previously defined as "domestic reporting companies" are exempt from the definition of reporting company and the CTA's reporting requirements. That is, any entity 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 is no longer required to file or update BOI reports with FinCEN.
- Foreign Reporting Companies. The definition of "reporting company" was redefined to include only those entities previously defined as "foreign reporting companies" (i.e., those entities formed under the law of foreign country and registered to do business in any state or tribal jurisdiction by filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe). Foreign reporting companies continue to have BOI report filing obligations.
- US Person Beneficial Owners. Foreign reporting companies are exempt from reporting BOI of any US persons3 and US persons are exempt from providing BOI to foreign reporting companies.4 Foreign reporting companies that only have US persons as beneficial owners are not required to report any beneficial owners.
- Foreign Pooled Investment Vehicles. The Interim Final Rule also revises the special rule for foreign pooled investment vehicles to exempt them from reporting the BOI of US persons. The prior rule required foreign pooled investment vehicles that were eligible for the pooled investment vehicle exemption5 to file a limited BOI report and report only one individual with substantial control over the entity (or if more than one, the individual who had "the greatest authority over the strategic management of the entity") as its beneficial owner. Under the Interim Final Rule, the foreign pooled investment vehicle must now only report the BOI of one individual with substantial control that is not a US person, if any. If there are multiple individuals that are not US persons that have substantial control, the foreign pooled investment vehicle must report the BOI of the individual who has "the greatest authority over the strategic management of the entity."
Foreign reporting companies are required to file their initial BOI reports 30 days from publication of the Interim Final Rule or 30 days after their registration to do business in the US, whichever is later. Foreign reporting companies that have not already submitted initial BOI reports should begin preparing BOI reports for the upcoming deadline and implement procedures for submitting updated BOI reports, as required.
FinCEN is accepting comments on the Interim Final Rule for 60 days after it is published in the Federal Register. It will assess whether to amend the Interim Final Rule after it considers any comments submitted during the comment period and intends to issue a final rule later this year. Any clients with concerns regarding the Interim Final Rule are encouraged to submit comments to FinCEN.
The Interim Final Rule does not address BOI already reported to FinCEN by entities that are no longer considered reporting companies. Newly exempt reporting companies (i.e., domestic reporting companies) may wish to submit a comment or seek guidance from FinCEN regarding how previously disclosed BOI will be treated in light of the changes to the CTA. We will continue to monitor for developments relating to the CTA, including any updates in pending litigation and further guidance issued by FinCEN or Treasury.
Footnotes
1 For more information, please see our prior Alerts: "Corporate Transparency Act Update: Penalties Paused & Significant Reduction in Scope Expected in Forthcoming Rulemaking," available here; "Corporate Transparency Act Update: Reporting Requirements Reinstated With March 21 Deadline," available here; "Corporate Transparency Act Update: Supreme Court Stays Nationwide Injunction but Reporting Still Voluntary," available here; "Corporate Transparency Act Update: Preliminary Injunction Reinstated and Reporting Voluntary Once Again," available here; "Important Update - Corporate Transparency Act: Reporting Reinstated by Appellate Court and FinCEN Extends Deadline to Jan. 13," available here; "Corporate Transparency Act Update: Government Challenges Nationwide Preliminary Injunction & FinCEN Clarifies That Reports Are Voluntary," available here; and "Corporate Transparency Act Update: Nationwide Preliminary Injunction Enjoining Enforcement," available here.
2 FinCEN, Interim Final Rule; Request for Comments, "Beneficial Ownership Information Reporting Requirement Revision and Deadline," 90 Fed. Reg. 13688 (Mar. 26, 2025).
3 The term "United States person" means
—
(A) a citizen or resident of the United States,
(B) a domestic partnership,
(C) a domestic corporation,
(D) any estate (other than a foreign estate, within the meaning of
paragraph (31)), and
(E) any trust if —
(i) a court within the United States is able to exercise primary
supervision over the administration of the trust, and
(ii) one or more United States persons have the authority to
control all substantial decisions of the trust.
26 U.S.C. § 7701(a)(30).
4 Company applicant information is still required to be provided for foreign reporting companies registered on or after Jan. 1, 2024, even if a company applicant is a US person.
5 The exemption applies to pooled investment vehicles that are operated or advised by certain other exempted entities, namely, a bank, credit union, SEC-registered broker-dealer in securities, SEC-registered investment company, SEC-registered investment adviser, or venture capital fund adviser.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
