Alert 05.05.25
Alert
01.06.26
Status of the Corporate Transparency Act After FinCEN’s Interim Final Rule
The Interim Final Rule, issued March 26, 2025, by the Financial Crimes Enforcement Network (FinCEN), stated that FinCEN was reexamining the Regulations implementing the Corporate Transparency Act (CTA). FinCEN materially reduced the scope of reporting required under the CTA until further notice, noting that FinCEN would use the remainder of 2025 to craft a modified set of Regulations on beneficial ownership disclosure. Under the Interim Final Rule, only entities formed outside the U.S. and qualified to do business in the U.S. would have to file Beneficial Ownership Information Reports to FinCEN identifying their direct or indirect beneficial owners. Moreover, no U.S. person need be identified as a beneficial owner of these reporting companies, nor would any U.S. person have a personal obligation to supply any information to FinCEN under the CTA. However, U.S. and non-U.S. persons who were “company applicants” of companies that remained obligated to report would continue to have to report and be reported.
Status of Potential Further Amendments to the Interim Final Rule and Beneficial Ownership Reporting Regulations Implementing the CTA
The Interim Final Rule expressly stated that “FinCEN is accepting comments on this interim final rule. FinCEN will assess the exemptions, as appropriate, in light of those comments and intends to issue a final rule this year.” FinCEN maintained this position for most of 2025 but did not provide guidance as to the potential changes it might be contemplating. However, in a filing made on December 3, 2025, FinCEN stated that it “is currently reviewing comments regarding the interim final rule as part of its final rulemaking. Although the interim final rule stated that FinCEN ‘intend[ed] to issue a final rule this year, FinCEN’s progress has been delayed by various factors, including the recent lapse in appropriations.” And, in fact, no such “final rule” or other modification was issued in 2025.
Status of Litigation Contesting Lawfulness (e.g., Constitutionality) of the CTA
Prior to the issuance of the Interim Final Rule, litigation challenging the CTA and its enforcement was proceeding, with mixed results, in several Federal Districts, without final decisions. However, court rulings in those lawsuits were a principal reason for the delay of the initial January 1, 2025, filing deadline for entities formed or qualified to do business before January 1, 2024. That deadline largely became moot, at least for the time being, as the result of the Interim Final Rule. The issuance of the Interim Final Rule, and the promise of revised regulation by year’s end, resulted in the cases being stayed during 2025, with one major exception. On December 19, 2025, a three-judge panel of the Eleventh Circuit, perhaps because FinCEN did not release its promised “final regulations,” issued an opinion in National Small Business United v. U.S. Department of the Treasury unanimously reversing a 2024 decision of the Northern District of Alabama that had held that the CTA was unconstitutional. The case was remanded to the District Court “for further proceedings consistent with this opinion.”
Status of Legislative Action to Amend or Repeal the CTA
While bills were proposed in Congress during 2025 to amend or repeal the CTA, none of the bills was the subject of debate or a vote.
Status of Orphan Information in FinCEN Registry
The changes made by the Interim Final Rule became effective over a year after the FinCEN Registry first became operational. As of March 26, 2025, beneficial ownership information had already been received by FinCEN in CTA filings that identified individuals who, by reason of the Interim Final Rule, were no longer beneficial owners. Questions were raised as to the fate of such orphan information (particularly since such information could, under the CTA, be shared (or previously have been shared) with other federal, state and foreign governmental entities). In public Congressional testimony on September 9, 2025, the Director of FinCEN, Andrea Gaeki, stated that FinCEN was working on plans to delete such information, but offered no specifics, such as timing, and we are aware of no subsequent public information on the plans.
Status of Residential Real Estate Reporting Rule
On September 30, 2025, FinCEN announced that the effective date of the reporting requirements of the Anti-Money Laundering Regulations for Residential Real Estate Transfers Rule (the “RRE Rule”) was postponed to March 1, 2026, from December 1, 2025, purportedly “to provide industry with more time to comply.” The RRE Rule will, if and when effective, require reporting to FinCEN of beneficial ownership interest information about certain parties to certain transfers of residential real estate or property amenable to residential real estate development, if the transfers are not being financed with a mortgage loan or other financing provided by financial institutions subject to AML/CFT program requirements. Additional guidance as to compliance with the RRE Rule was provided by FinCEN on December 19, 2025, including 36 pages of “Filing Instructions.” Litigation challenging this rule is still pending. On December 9, 2025, in a case in Florida, a U.S. Magistrate Judge filed a Report and Recommendation granting summary judgment dismissing a challenge to the RRE Rule, but this is unlikely to be the last battle of this war.
Status of FinCEN GTOs
Despite the proposal and pendency of the RRE Rule, FinCEN’s preexisting Geographic Targeting Order remains in effect, requiring reporting of certain transfers to legal entities of one-to-four-family real estate in specified U.S. counties where (i) the purchase is made, at least in part, using currency or a cashier’s check, a certified check, a traveler’s check, a personal check, a business check, a money order in any form, a funds transfer, or virtual currency, and (ii) the purchase is made without a bank loan or other similar form of external financing by a financial institution that has both an obligation to maintain an anti-money laundering program and an obligation to report suspicious transactions under certain FinCEN regulations.
Status of Investment Advisors Rule
Similarly, FinCEN just postponed the effective date of the Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisors (the “Investment Advisors Rule”). On December 31, 2025, FinCEN issued a final rule to extend the effective date of the Investment Advisors Rule from January 1, 2026, until January 1, 2028. The Investment Advisors Rule was published on September 4, 2024, and, when effective, will impose an obligation on certain investment advisors, as “financial institutions,” to establish AML/CFT programs, report suspicious activity and keep relevant records, among other requirements. Besides just a postponement, FinCEN indicated that it “intends to further review the Investment Advisors Rule as well and may make changes to it before implementation.”
Status of New York State LLC Transparency Act
New York State is the only state to have enacted beneficial ownership information disclosure requirements layering on top of the CTA. On January 1, 2026, this New York State LLC Transparency Act became effective. At present, it only requires disclosure of names and personal information for beneficial owners of limited liability companies formed outside of the U.S. and qualified to do business in New York State (subject to exemptions comparable to the CTA), and only applies to entities first qualified to do business from and after January 1, 2026. Moreover, at present, names and personal information of individuals who are U.S. persons need not be reported. Foreign LLCs qualified to do business prior to 2026 will have to comply by December 31, 2026. A foreign LLC qualified to do business in New York State that benefits from one of the exemptions from filing under the CTA (with a few language changes) need not provide beneficial ownership information, but must file an attestation claiming the exemption by name, with an explanation of the facts on which the exemption is based. The individual primarily responsible for filing the entity’s registration with the NYS Department of State (DOS) must be provided, with such individual’s personal information. The definition of “beneficial owner” largely follows the CTA definition; the required personal information is similar to, but varies slightly from, the CTA requirements. The LLC Transparency Act was meant to track the original CTA regulations (i.e., pre-Interim Final Regulation) and to apply to domestic and foreign LLCs created in or qualified to do business in New York State, but because of the language of the New York act, it now tracks the Interim Final Rule, dramatically reducing who must file. A proposal to decouple the LLC Transparency Act from the Interim Final Rules, so as to restore its application to U.S. entities and U.S. individuals, was vetoed by Governor Hochul in late December 2025. The NYS DOS website has been populated with instructions, FAQs and forms to be used for making electronic filings to a non-public database established by the DOS, as well as instructions for paying (by credit card) the $25.00 per filing fee charged for making electronic filings. The DOS website can be reached through this link.