The Treasury Department has yet to issue the proposed rulemaking reflecting these changes to the scope of BOI reporting requirements, and it will be important to see the proposed rulemaking to better understand how the Treasury Department and FinCEN plan to effect these changes. Items to look out for in any proposed rulemaking include:
- Whether U.S. citizens who are beneficial owners of foreign reporting companies will need to comply with BOI reporting efforts of foreign reporting companies.
- Whether domestic reporting companies with foreign beneficial owners will be subject to any BOI reporting requirements.
- How the language regarding ending enforcement of penalties and fines against U.S. citizens and domestic reporting companies for non-compliance is worded (i.e., eliminating altogether enforcement against all U.S. citizens and domestic reporting companies or a general, discretionary pause by FinCEN).
In addition, the validity or legality of any proposed rulemaking regarding the narrowed scope of the CTA may be challenged in the courts. And, as noted in our previous alert, there are still a number of court cases pending, and Congress is also considering bills that would affect the CTA. Accordingly, this is unlikely to be the last update in the CTA enforcement saga.
The U.S. Department of the Treasury issued the following release regarding enforcement of the CTA:
Treasury Department Announces Suspension of Enforcement of Corporate Transparency Act Against U.S. Citizens and Domestic Reporting Companies
The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.
“This is a victory for common sense,” said U.S. Secretary of the Treasury Scott Bessent. “Today’s action is part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy.”
In addition, FinCEN issued the following release regarding enforcement of the CTA:
FinCEN Not Issuing Fines or Penalties in Connection with Beneficial Ownership Information Reporting Deadlines
WASHINGTON––Today, FinCEN announced that it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act by the current deadlines. No fines or penalties will be issued, and no enforcement actions will be taken, until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed. This announcement continues Treasury’s commitment to reducing regulatory burden on businesses, as well as prioritizing under the Corporate Transparency Act reporting of BOI for those entities that pose the most significant law enforcement and national security risks.
No later than March 21, 2025, FinCEN intends to issue an interim final rule that extends BOI reporting deadlines, recognizing the need to provide new guidance and clarity as quickly as possible, while ensuring that BOI that is highly useful to important national security, intelligence, and law enforcement activities is reported.
FinCEN also intends to solicit public comment on potential revisions to existing BOI reporting requirements. FinCEN will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year to minimize burden on small businesses while ensuring that BOI is highly useful to important national security, intelligence, and law enforcement activities, as well to determine what, if any, modifications to the deadlines referenced here should be considered.