March 11, 2025
What Happened?
The ongoing drama of the Corporate Transparency Act (“CTA”) took another twist and turn. After several preliminary injunctions were lifted (see our prior coverage here) it appeared that the CTA and its required reporting of beneficial ownership information were back on. In the announcement, the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) granted an additional 30-day extension to the reporting deadline, placing the new deadline on March 21, 2025.
However, FinCEN released a separate statement the following week saying it would not issue any fines or penalties or take further enforcement actions against companies for failing to report beneficial ownership information until a forthcoming rule from FinCEN becomes effective. In the statement FinCEN gave itself the deadline of March 21, 2025, to issue an interim final rule. The interim rule would provide guidance and clarity and also create a new effective date and reporting deadline.
Three days after the FinCEN statement teasing a forthcoming interim rule, the Treasury Department announced that “not only will [the Treasury Department] 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 announcement quoted the newly appointed U.S. Secretary of the Treasury Scott Bessent, who said “[t]oday’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.”
What does this mean for me?
If you filed your beneficiation ownership information, you are fine. If you did not file your beneficial ownership information, you are also fine.
It is surprising for a Treasury Department announcement to contradict a FinCEN release, especially when it comes on a Sunday afternoon just 3 days later. Narrowing the scope of the CTA reporting requirement to foreign companies limits transparency. It also creates an obvious loophole for those non-U.S. entities that want to avoid reporting, simply form a new entity within the U.S. Taken further, if U.S. shell-companies remain opaque, international anti-money laundering standards could become an issue.
What this means for FinCEN’s anti-money laundering and countering the financing of terrorism rule (“AML/CFT”), with a January 1, 2026, compliance deadline, is anyone’s guess. Likewise, FinCEN’s third rule targeting anti-money laundering by requiring Customer Identification Programs has not been finalized. A retreat from this rule, a re-proposal, or a finalization are all possible.
The CTA has bounced around from legal challenges, to moving deadlines on to interdepartmental contradictions. In the face of an unpredictable regulatory future, we will continue to monitor the latest developments that impact investment advisers.
If you would like to speak with a regulatory expert, please let us know.
