Is the Corporate Transparency Act (CTA) Still in Effect?

In response to an executive order signed by President Donald Trump directing federal agencies to “alleviate unnecessary regulatory burdens placed on the American people,¹” the Financial Crimes Enforcement Network (FinCEN) released an interim final rule that substantially narrows the scope of the Corporate Transparency Act (CTA) by requiring only entities previously defined as “foreign reporting companies” to file beneficial ownership information reports (BOIR).

The interim final rule, which became effective on March 26, 2025, exempts entities formed in the United States (known as “domestic reporting companies” under the prior rule) from any requirement to report beneficial ownership information. Under the interim final rule, such entities are no longer required to file initial reports, nor are they required to update reports that were previously filed.

The definition of “reporting company” has been revised to mean an entity formed under the law of a foreign country that has registered to do business in the United States. Foreign entities that meet the revised definition of reporting company are still required to file a BOIR. But if a foreign entity is only registered to do business in the U.S. through a subsidiary formed in the U.S., neither the parent nor the subsidiary would be required to file a BOIR.

Furthermore, foreign reporting companies are exempt from having to provide the BOI of any U.S. person that is a beneficial owner. And U.S. persons who are beneficial owners of foreign reporting companies are now exempt from having to provide BOI to those companies.

Under the prior rule, pooled investment vehicles (PIVs) were subject to a special rule, which stated that a PIV was only required to report information about a single individual who exercises substantial control over the entity. The interim final rule amends the special rule such that no BOI needs to be reported if the only individuals exercising substantial control over a foreign PIV are U.S persons. However, if at least one non-U.S. person exercises such control over a foreign PIV, the PIV is required to report the BOI of the non-U.S. person who has the greatest authority over the strategic management of the entity.

These changes are in response to President Trump’s Executive Order (E.O.) 14192, Unleashing American Prosperity Through Deregulation. E.O. 14192 announced a policy of “significantly reduc[ing] the private expenditures required to comply with Federal regulations to secure America’s economic prosperity.” Consistent with that directive, FinCEN “reassessed the balance between the usefulness of collecting BOI and the regulatory burdens imposed by the scope of the Reporting Rule” and has determined that “the reporting of BOI by domestic reporting companies and their beneficial owners ‘would not serve the public interest’ and ‘would not be highly useful in national security, intelligence, and law enforcement agency efforts to detect, prevent, or prosecute money laundering, the financing of terrorism, proliferation finance, serious tax fraud, or other crimes.’”² 

FinCEN stated that foreign reporting companies, by contrast, “present heightened national security and illicit finance risks and different concerns about regulatory burdens,” and it emphasized “the risks of foreign illicit actors accessing the U.S. financial system through the use of legal entities created in foreign jurisdictions but registered to do business in the United States.”³ These risks led FinCEN to conclude that exempting foreign reporting companies from having to report BOI would not serve the public interest but that the reporting of U.S. persons who are beneficial owners of such companies was unnecessary. 

A foreign entity that became a reporting company prior to March 26, 2025 was required to file an initial BOIR no later than April 25, 2025. Any foreign entity that becomes a reporting company after March 26, 2025 is required to file an initial BOIR within 30 days of the earlier of the date on which it receives actual notice that it has been registered to do business in a U.S. jurisdiction or the date on which a secretary of state or similar office first provides public notice, such as through a publicly accessible registry, that the reporting company has been registered to do business. 

FinCEN is accepting written comments on its interim final rule until May 27, 2025. The agency intends to issue a final rule by the end of 2025. 

This e-Bulletin was prepared by Harry Berezin of Goodwin Procter LLP, who is a member of the Corporations Committee of the Business Law Section of the California Lawyers Association. The views expressed herein are those of the author and do not necessarily reflect the views of Goodwin Procter. 

¹ Executive Order No. 14192, 90 Fed. Reg. 9065 (Jan. 31, 2025).

² Interim Final Rule, 90 Fed. Reg. 13688 (Mar. 26, 2025). 

³ Id.