Alert 05.05.25
Service
Corporate Transparency Act Resource Center
Contacts
Robert B. Robbins
Partner, Washington, DC
T: +1.202.663.8136
robert.robbins@pillsburylaw.com
Deborah S. Thoren-Peden
Partner, Los Angeles
T: +1.213.488.7320
deborah.thorenpeden@pillsburylaw.com
Andrew J. Weiner
Partner, New York
T: +1.212.858.1034
andrew.weiner@pillsburylaw.com
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UPDATE (3/26/25): Late on March 21, 2025, FinCEN issued a revised interim final rule (the “Interim Final Rule”) that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act (the “CTA”) and published a revised interim Final Rule on March 26, 2025. The text below shaded RED reflects changes from the prior update as a result of our review of the published revised interim rule:
1) The Interim Final Rule was published in the Congressional Record on March 26, 2025 and became effective on that date (the “Effective Date”). The new deadlines will run from the Effective Date.
2) The new Interim Final Rule significantly reduces the class of, and changes the filing requirements of, “reporting companies” who are obligated to make filings under the CTA.
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- Beneficial ownership filings are no longer required for “domestic reporting companies”, defined as corporations, LLCs, limited partnerships and certain other entities created by filing a document with a secretary of state or similar office of a state or Indian Tribe. Thus, all entities created in the U.S. are no longer considered “reporting companies” and are exempt, even if they have previously filed with FinCEN or if previously filed information is no longer accurate.
- Beneficial ownership filings continue to be required from “foreign reporting companies”, defined as entities formed under the law of a foreign country and registered to do business in the U.S. by filing a document with a secretary of state or similar office of a state or Indian Tribe.
- Foreign reporting companies will no longer be obligated to report any U.S. persons as beneficial owners, and no U.S. person is obligated to provide beneficial ownership information under the CTA to any reporting company for which they are a beneficial owner.
3) For covered foreign reporting entities:
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- For filings that were due prior to the date that the CTA filing requirements were suspended, the beneficial ownership filings will be due no later than April 25, 2025.
- For covered foreign reporting companies that have filed the required BOI information with FinCEN, where the information needs to be updated or corrected such filings will be due no later than April 25, 2025.
- For covered foreign reporting companies that register to do business in the U.S. after the Effective Date, the beneficial ownership filings will be due 30 days after the registration to do business in the U.S. is filed.
- Covered foreign reporting companies will be exempt from the requirement to report beneficial ownership information of any U.S. persons who are beneficial owners.
- Foreign pooled investment vehicles are now exempt from having to report the BOI of U.S. persons who exercise substantial control over the entity. Foreign pooled investment vehicles that are otherwise subject to reporting but for the limited exemption in the current CTA regulations (see 31 CFR 1010 .380(c)(2)(xviii)) and that are formed under the laws of a foreign country, are required to report beneficial ownership information solely with respect to an individual who exercises substantial control over the entity. If more than one individual exercises substantial control over the entity, the entity is required to report information with respect to the individual who has the greatest authority over the strategic management of the entity. FinCEN has revised the rules so that foreign pooled investment vehicles must report the BOI of an individual who exercises substantial control over the entity if that individual is not a U.S. person. If more than one individual exercises substantial control over the entity and at least one of those individuals is not a U.S. person, the entity must report information with respect to the individual who is not a U.S. person who has the greatest authority over the strategic management of the entity. If there is no individual with substantial control who is not a U.S. person, the foreign pooled investment vehicle is not required to report any beneficial owners.
- The Interim Final Rule otherwise retains the requirements for foreign reporting companies and their beneficial owners (other than U.S. persons) to report their BOI to FinCEN, while extending the deadline for those companies to file initial BOI reports, or update or correct previously filed BOI reports, to 30 days of the Effective Date (i.e., April 25, 2025) or 30 days after their registration to do business in the U.S., whichever comes later.
4) FinCEN is accepting comments on the Interim Final Rule that are filed on or before May 27, 2025, and intends to issue a Final Rule this year.
5) FinCEN has not advised what it will do with BOI filings made under the CTA that have already been filed with FinCEN for U.S. citizens and U.S. entities.
6) The interim final rule does not expressly exempt foreign reporting companies from naming their company applicants. Nor are individuals with FinCEN identifiers relieved of their obligation to update personal information.
7) Given that the plaintiffs in the currently pending lawsuits challenging the constitutionality of the CTA are now exempt from the CTA’s beneficial ownership filing requirements, FinCEN has commenced filing motions to dismiss those lawsuits on lack of standing grounds.
The Corporate Transparency Act (CTA), adopted in January 2021, is now in effect. Pillsbury has assembled a multi-disciplinary task force to assist clients in preparing for and responding to the new and evolving requirements that the CTA will impose.
The stated purpose of the CTA is to assist in identifying beneficial ownership and control of entities operating in the United States, in order to facilitate anti-terrorism, anti-money laundering and tax collection activities of federal, state and foreign governments. It imposes on entities formed or qualified to do business in the U.S. the obligation to report individuals who substantially own and control them, or who helped form them—except for entities that benefit from one of the numerous exemptions provided. This information will be collected by FinCEN, an arm of the U.S. Treasury Department, in a confidential database that will be accessible by governmental authorities and authorized lenders, but not to the general public.
Willful failure to comply with the CTA can result in material civil and criminal fines and penalties.
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FinCEN has announced that the CTA will take effect for new entities formed from and after, January 1, 2024, and on January 1, 2025, for previously formed entities. Every business entity doing business in the U.S. will have to determine whether it might benefit from an exemption and, if not, how to prepare itself to respond to the CTA’s disclosure requirements. This may involve, among other things, becoming familiar with new forms and new procedures, and changes in the documentation used by the business entities generally (for example, joint venture agreements and loan agreements). Individuals whose identity might be disclosed will also want guidance. Financial institutions will need to reconsider their Customer Due Diligence (CDD)/Know Your Customer (KYC) procedures when, as planned, the existing rules are modified to conform more closely with the CTA.
Members of the Pillsbury CTA task force have been tracking the CTA’s evolution since 2021, including the voluminous regulations it entails. The firm's lawyers are prepared to assist clients in dealing with the tricky and not always clear requirements of the CTA, and to support related legal needs.
