United States: Enforcement of CTA and BOI reporting rule suspended against US companies and citizens

06 Mar 2025    1 minute read
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In brief

Over the past week there have been two significant announcements by US Financial Crimes Enforcement Network (FinCEN) and the US Department of the Treasury (Treasury) with respect to the filing of beneficial ownership information (BOI) reports under the Corporate Transparency Act (CTA). Based on these announcements, foreign reporting companies should technically continue complying with the BOI requirements, though there will be no consequences for failing to do so until new regulations are issued. As to domestic reporting companies, there should not be any enforcement of the CTA against such companies or consequences if such companies fail to file BOI reports.

Contents

In depth

On February 27, 2025, FinCEN announced that it will not issue fines or penalties or take enforcement actions against any companies based on any failure to update or file BOI reports by the current reporting deadline, which is March 21, 2025, for many reporting companies. This announcement also stated that no later than March 21, 2025, FinCEN intends to issue an interim final rule extending reporting deadlines.

Following FinCEN's announcement, on March 2, 2025, Treasury announced that it will not enforce the CTA against any US citizens or "domestic reporting companies". The current CTA regulations define a domestic reporting company as one that is "created by the filing of a document with a secretary of state or a similar office under the law of a State or Indian tribe," as opposed to a foreign reporting company, defined as an entity "formed under the law of a foreign country and registered to do business in the United States by the filing of a document with a secretary of state or a similar office under the laws of a State or Indian tribe" (31 CFR 1010.380(c)(1)). There is no corresponding update on the FinCEN website with respect to Treasury's March 2, 2025 announcement.

Thus, foreign reporting companies should technically continue complying with the BOI requirements, though there will be no consequences currently for failing to do so. As to domestic reporting companies, there should not be any enforcement of the CTA against such companies or consequences if such companies fail to file BOI reports. Companies may still choose to voluntarily file by the March 21, 2025 due date.

Micah Sperling, Junior Associate, has contributed to this legal update.

Contact Information
Glenn Fox
Partner at BakerMcKenzie
New York
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glenn.fox@bakermckenzie.com

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