CTA Update - On February 27th, 2025, FinCEN put out a release stating they will not be issuing any fines or penalties or take any other enforcement actions against any companies based on a failure to file beneficial ownership information pursuant to the CTA. This release also mentioned an interim final rule to be passed which would reduce regulatory burdens and prioritize reporting for those entities that pose the most significant law enforcement and national security risks.
Then, last week, the Department of Treasury issued its own release to help clarify what FinCEN’s release ultimately meant. The DoT clarified individuals and “domestic reporting companies” would not be subject to penalties or fines and expressly stated the CTA will be changed to narrowly affect “foreign reporting companies” only. This is ultimately a drastic change to the current requirements of the law.
Based on these releases, reporting should be paused at this time as we await the interim final rule to be published, which is expected no later than March 21, 2025. Based on the latest release, it is likely only entities formed under foreign jurisdictions that have filed to transact business in the US will now be subject to the CTA’s reporting requirements. Whether any domestic reporting companies with foreign ownership ties would be subject to reporting requirements is unknown at this time.
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