CTA Remains Applicable to Foreign Reporting Companies and Their Foreign Beneficial Owners
Last Friday, the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) published interim final rules substantially narrowing beneficial ownership information (“BOI”) reporting obligations under the Corporate Transparency Act (“CTA”). As anticipated in our alert from earlier this month, the new rules exempt domestic reporting companies from the obligation to file BOI reports and, while foreign corporations registered to do business in the U.S. still must file BOI reports, those reports need not include information for U.S. beneficial owners.
The CTA’s reporting requirements will remain applicable to foreign reporting companies registered to do business in the U.S. Such foreign companies in existence prior to the March 21 announcement will have 30 days from March 21, 2025, to file a BOI report. Going forward, any entity that becomes a foreign reporting company on or after March 21 will have 30 days to file a BOI report from the earlier of the date it receives actual notice of registration to do business or the date on which a secretary of state or similar office first provides public notice of such registration.
Entities formed in possessions are considered domestic and need not file BOI reports. Likewise, U.S. citizens who are resident in a U.S. possession are considered U.S. persons and their ownership of entities, whether foreign or domestic, is not reportable. However, non-citizen residents of U.S. possessions are not considered U.S. persons and their BOI must be reported by foreign reporting entities.
Treasury will solicit comments in anticipation of a final rule being issued later this year. It is difficult to predict what changes, if any, may be made when final regulations are published. However, whether Treasury has the authority to reduce the scope of reporting required under the CTA statute is likely to be subject to legal challenges. The reduced enforcement scope has attracted bipartisan attention from Congress (see letter from Senators Whitehouse (D) and Grassley (R) questioning the legal authority for the non-enforcement policy and encouraging Secretary Bessent to “fully implement the CTA.”).
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