Only Foreign Entities to Report

On March 21, 2025, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that significantly reduces the scope of the Corporate Transparency Act (CTA) by eliminating Beneficial Ownership Information (BOI) reporting for most U.S. companies. Under this rule, only foreign entities registered to do business in the U.S. will need to submit BOI reports, and only foreign beneficial owners of these entities will be required to be reported, unless exempt. This change reduces the compliance burden by 99.8%, with less than 12,000 companies expected to report annually.

The policy shift follows a series of events, including the suspension of CTA enforcement and a formal rulemaking process aimed at narrowing the reporting obligations to focus on foreign entities that could engage in illicit transactions. This change stems from a provision in the CTA that allows the U.S. Treasury to create exemptions for certain reporting requirements.

The rule aims to combat money laundering and other financial crimes, but some critics argue that it undermines the original goal of the CTA, which was to identify hidden ownership of U.S. entities used for illicit purposes. The rule is currently open for public comment, and FinCEN plans to issue a final rule later this year.

The CTA remains under legal scrutiny, and additional challenges to the rule are expected, including potential cases that could impact the future of the CTA and similar state-level legislation.  Stay tuned for further updates.  Should you have additional questions or are in need of an update to your planning please feel free to give us a call at 425-440-3494 or email us at office@dlolawgroup.com.