On March 21, 2025, the Financial Crimes Enforcement Network (FinCEN) adopted an interim final rule (the Interim Rule) that significantly scales back the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) by amending the current BOI reporting rule. Giving effect to the Interim Rule, the only entities required to report BOI under the CTA will be foreign entities registered to do business in the United States. Reporting deadlines for those entities have been extended.
The Interim Rule:
1. exempts from BOI reporting requirements under the CTA both (a) entities created in the United States (i.e., entities formerly known as “domestic reporting companies”) and (b) “U.S. person” beneficial owners (i.e., with respect to citizens or residents of the United States, as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986).
2. revises the definition of “reporting company” to mean only entities 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 by the filing of a document with a Secretary of State or similar office (i.e., entities formerly known as “foreign reporting companies”).
What are the effects of the Interim Rule?
- Domestic entities are now exempt from all reporting requirements under the CTA, including to update or correct previously filed BOI reports.
Foreign entities that meet the new definition of a “reporting company” that do not qualify for an exemption under the CTA must report their BOI to FinCEN under the following extended deadlines:
- Reporting companies registered to do business in the United States before the date of publication of the Interim Rule in the Federal Register must file BOI reports no later than 30 days after the publication date.
- Reporting companies registered to do business in the United States on or after the date of publication of the Interim Rule in the Federal Register must file BOI reports within 30 calendar days after receiving notice that their registration is effective.
- Foreign entities that meet the new definition of a “reporting company” 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 of which they are a beneficial owner.
- Foreign reporting companies that only have beneficial owners that are U.S. persons will be exempt from the requirement to report any beneficial owners.
The Interim Rule also revises the special rule associated with foreign pooled investment vehicles (PIVs) to exempt foreign PIVs from having to report the BOI of U.S. persons who exercise substantial control over the PIV. Under this special rule, PIVs that would be reporting companies but for the PIV exemption, and that are formed under the laws of a foreign country and that are registered to do business in the U.S., were previously required to report BOI solely with respect to an individual who exercises substantial control over the entity. Under the Interim Rule, foreign PIVs must now report only the BOI of an individual who exercises substantial control over the PIV, if that individual is not a U.S. person. If all individuals with substantial control are U.S. persons, then the foreign PIV is not required to report any beneficial owners. If more than one individual exercises substantial control over the PIV and at least one of those individuals is not a U.S. person, the PIV must report information with respect to the individual who is not a U.S. person who has the greatest authority over the strategic management of the PIV.
FinCEN confirmed in its March 21, 2025, announcement that FinCEN is “applying all exemptions and deadline extensions in the interim final rule as of today [i.e., March 21, 2025], in advance of formal publication in the Federal Register, and will further not enforce any beneficial ownership reporting penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners.” Therefore, subject to further developments, reporting companies and individuals that are now exempt from CTA filing requirements under the Interim Rule appear justified in relying on FinCEN’s March 21, 2025, announcement, including discontinuing updating and correcting previously filed BOI reports.
Foreign reporting companies with beneficial owners who are not U.S. persons may wish to continue gathering relevant information required to complete their BOI reporting obligations but should not file BOI reports until the Interim Rule has been published in the Federal Register.
FinCEN will accept comments on the Interim Rule for 60 days after its publication in the Federal Register and intends to issue a final rule later this year. While the FinCEN announcement was effective March 21, 2025, the Interim Rule is effective on publication in the Federal Register. Despite that effective date, potentially affected entities and individuals should continue to monitor the comment process and other CTA developments as FinCEN prepares its final rule.
