Treasury Announcement – CTA to be Limited to Foreign Companies Only

Following a whirlwind of litigation, much of which remains unresolved pending various appeals, the Corporate Transparency Act (“CTA”) is once again in effect. However, in a February 27 press release, the Financial Crimes Enforcement Network (“FinCEN”), the federal agency in the Department of the Treasury (“US Treasury”) responsible for enforcing the CTA, announced that it will not issue any fines or penalties or take any enforcement action at this time.

Instead, FinCEN has committed to issue a new “Interim Final Rule” no later than March 21, 2025, which would include new deadlines for filing Beneficial Ownership Information (“BOI”) with FinCEN. According to FinCEN, only companies that fail to file their BOI reports before the deadlines to be announced in that forthcoming Interim Final Rule will be subject to fines.

Subsequently, in a press release issued by Treasury Secretary Scott Bessent on March 2, the US Treasury announced that it will issue new rules to curtail reporting requirements under the Corporate Transparency Act (“CTA”) in the coming months. According to the press release, the intent of the US Treasury is to only enforce CTA against Foreign Reporting Companies. Domestic Reporting Companies and their beneficial owners will not be subject to any fines or other enforcement actions for failure to file Beneficial Ownership Information (“BOI”).

Reading FinCEN’s February 27 announcement and US Treasury’s March 2 announcement together, it appears likely that the forthcoming interim final rule will shed light on the Department’s enforcement intentions going forward, especially for domestic entities with foreign ownership, whose status is unclear in light of the recent announcements.

Key Takeaways on the Current Status of CTA:

• The Department of the Treasury has announced its intention to suspend any enforcement action of the CTA against Domestic Reporting Companies and their owners.
• FinCEN has committed to issuing a new Interim Final Rule no later than March 21, 2025, with updated reporting deadlines.
• Future rules will clarify how CTA will affect foreign and domestic Reporting Companies going forward.

For More Information on the definition of Reporting Companies, Beneficial Ownership Reports, and CTA generally, see our prior blog posts analyzing the law HERE.

5th Circuit, CTA, Corporate Transparency Act, FinCEN, Reporting Companies