Key takeaways
- Narrowed BOI reporting scope: Interim final rule limits CTA reporting obligations solely to foreign reporting companies and foreign beneficial owners
- Immediate implementation with review period: Rule is effective immediately, with 60-day public comment period ending May 27, 2025, though changes based on public input remain uncertain
As previewed in an announcement by the U.S. Department of the Treasury on March 2, 2025, the Financial Crimes Enforcement Network (FinCEN), the body tasked with enforcing the Corporate Transparency Act (CTA), issued an interim final rule that narrows the scope of the CTA reporting obligations solely to foreign reporting companies, eliminating any requirement under the CTA that entities formed in the United States file beneficial ownership information (BOI) reports with FinCEN. Accordingly, under this interim final rule, only companies that are formed in a non-U.S. jurisdiction that register to do business as a foreign entity in a U.S. jurisdiction shall be required to file BOI reports. The rule further provides that foreign reporting companies are not required to report BOI for any U.S. persons included among their beneficial owners. Lastly, the interim final rule establishes a deadline of 30 days from publication, or April 25, 2025, for existing foreign reporting companies to file BOI reports. Consistent with the exemption that limits BOI reporting to non-U.S. beneficial owners of foreign reporting companies, entities that are foreign pooled investment vehicles are not required to report BOI of U.S. persons who exercise substantial control over the investment vehicle. Due to these changes, most companies required to file BOI reports under the prior BOI reporting rule are now exempt, and foreign-controlled entities that are formed in the U.S. as domestic reporting companies will not have BOI reporting obligations.
The interim final rule describes the factors considered by FinCEN in adopting these changes and supporting its determination that the burden on U.S. small businesses associated with making BOI filings outweighs the benefits of collecting BOI from domestic reporting companies. The rule notes that foreign reporting companies pose an increased national security risk that justifies limiting the scope of BOI reporting to foreign beneficial owners of foreign reporting companies. The changes to the BOI reporting rule are consistent with the Trump administration's policy of deregulation and reducing regulatory compliance costs for U.S. businesses.
The interim final rule is effective immediately and provides for a 60-day review and comment period that ends on May 27, 2025. The rule was issued without advance public comment under a provision in the Administrative Procedure Act that authorizes regulations to be issued without advance notice and comment when an agency finds that notice and comment are “impracticable, unnecessary, or contrary to the public interest.” FinCEN pointed to the need to clarify the scope of BOI reporting obligations prior to the previously announced March 21, 2025 deadline for filing BOI reports and considered that the interim final rule does not impose any new burdens, but rather reduces the burden on domestic reporting companies and U.S. persons.
It remains to be seen whether FinCEN makes any changes to the interim final rule based on its consideration of public comments received during the review and comment period. For now, however, most of the companies and individuals who were required to provide information to FinCEN under the prior BOI reporting rule are exempt.
Client Alert 2025-096