Corporate Transparency Act update: Interim Final Rule narrows reporting requirements to foreign entities
On March 21, 2025, the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that exempts domestic entities (i.e. entities formed in the U.S.) and U.S. persons from the reporting requirements of the Corporate Transparency Act (CTA). The interim final rule narrows the definition of “reporting company” to entities formed under the laws of a foreign country and registered to do business in the U.S. Even U.S. persons who are beneficial owners of foreign reporting companies are exempt from reporting their beneficial information pursuant to the interim final rule. Please see below for the key enforcement changes.
The interim final rule is consistent with the U.S. Department of the Treasury’s announcement on March 2, 2025 that it intends on releasing U.S. small businesses from the regulatory burden of the CTA. Currently, FinCEN is accepting comments on the interim final rule which is expected to be published later this year. Publication of the interim final rule will begin the clock for the new filing deadlines for foreign reporting companies.
Key Enforcement Changes:
- Domestic entities and U.S. persons are not subject to the reporting requirements of the CTA.
- U.S. entities that have already filed beneficial ownership information are not required to update that information.
- Foreign reporting companies do not have to report any U.S. persons who are beneficial owners, only beneficial owners who are neither a domestic entity nor a U.S. person (i.e. foreign beneficial owners).
- New deadlines for foreign reporting companies:
- Reporting companies registered to do business in the United States before the date of publication of the interim final rule must file BOI reports no later than 30 days from that date.
- Reporting companies registered to do business in the United States on or after the date of publication of the interim final rule have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.
For now, domestic entities and U.S. persons do not need to take any further steps with regard to the CTA. For foreign entities that are registered to do business in the U.S., begin evaluating any compliance requirements under the CTA as initial beneficial ownership reports will likely be due at some point later this year. Please reach out to your attorney at McDonald Hopkins with any questions or concerns regarding this matter.