Interim Final Rule Limits Beneficial Ownership Interest Reporting To Be Limited to Foreign Companies

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Those keeping track of Beneficial Ownership Interest (BOI) reporting may have noticed a back and forth between federal courts in enjoining the Financial Crimes Enforcement Network (FinCEN).  The U.S. District Court for the Eastern District of Texas issued a stay in its early decision, allowing reporting to continue on February 18, 2025.  This decision is in the Smith v. U.S. Department of the Treasury, No. 6:24-CV-336-JDK, 2025 WL 41924 (E.D. Tex. Jan. 7, 2025). On February 19, 2025, FinCEN issued guidance that most reporting will be due by March 21, 2025. 

On March 21, 2025, FinCEN issued an interim final rule that removed all U.S. companies from reporting requirements under the Corporate Transparency Act.  In the interim final rule, FinCEN will only require reporting for those entities created under the laws of a foreign country that do business in the U.S.  These foreign entities would not need to report U.S. persons who are a part of the foreign entity.  These foreign entities will have until April 25, 2025, to report BOI.  FinCEN is currently taking comments on the interim final rule until May 27, 2025.  You can give comments at https://go.umd.edu/BOIIR.

The Corporate Transparency Act was created intending to prevent money laundering, illicit financial transactions, and financial terrorism.  As a part of the law, FinCEN was made in the Department of the Treasury to create a national database of business entities and owners of those business entities that are not subject to regular public disclosure laws.  This database required beneficial owners of businesses to disclose certain information.   As mentioned earlier, the interim rules limit the impact of reporting to only foreign-owned companies.  To understand more about the type of entities that would have to report, you can look at this helpful publication by my colleagues at the Ohio State University at https://go.umd.edu/OSUCTAFS.