Navigating the Latest Updates on the Corporate Transparency Act (CTA) and Beneficial Ownership Information (BOI) Reporting

The evolving landscape of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements can be confusing. To help businesses stay informed, we’re sharing the latest developments.

Key Policy Shift: Enforcement Suspension

In a significant policy change, the U.S. Treasury Department announced on March 2, 2025, that it will suspend enforcement of the CTA and its BOI reporting requirements for U.S. citizens and domestic companies. This decision exempts these entities from penalties for non-compliance with BOI reporting mandates. The move follows legal challenges and concerns over the regulatory burden on small businesses. To address these concerns, the Treasury plans to propose a rule narrowing BOI reporting requirements exclusively to foreign reporting companies. This shift aims to alleviate regulatory pressures on small businesses while supporting economic growth initiatives.

Background and Legal Challenges

The CTA, enacted in 2021, was designed to combat illicit financial activities by requiring companies to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). However, the law has faced strong opposition. A recent federal court ruling in Texas deemed the BOI reporting requirement unconstitutional, leading to a nationwide injunction that was lifted on February 18, 2025. Subsequently, FinCEN set a filing deadline for BOI reports on March 21, 2025. However, on February 27, FinCEN issued a notice stating it would not impose penalties or take enforcement actions against companies failing to comply by this deadline.

Latest Developments and Treasury’s Position

With the Treasury Department's recent decision, enforcement of BOI reporting requirements is suspended until further regulatory actions are finalized. Key points from the announcement include:

• No penalties or fines for non-compliance with BOI reporting deadlines until an interim final rule is implemented.
• A new rule, expected by March 21, 2025, will likely extend BOI reporting deadlines and provide updated guidance.
• Public feedback will be sought on potential revisions to minimize burdens on small businesses while maintaining effective law enforcement and national security oversight.

Legislative Efforts to Delay Reporting Requirements

Alongside regulatory changes, legislative efforts are in progress to delay the BOI reporting deadline to January 1, 2026. Earlier this month, the U.S. House of Representatives passed a bill extending the deadline for entities existing as of January 1, 2024. The bill now awaits Senate approval and the President’s signature to take effect.

Next steps for businesses

While FinCEN has temporarily halted enforcement actions, businesses should continue monitoring updates to ensure future compliance. Entities potentially subject to BOI reporting obligations should prepare for rule modifications and extended deadlines while awaiting further guidance from FinCEN and the Treasury Department.

The suspension of BOI reporting enforcement marks a notable regulatory shift, balancing reduced compliance burdens for businesses with ongoing national security priorities. As legislative measures progress and regulatory updates unfold, we will keep you informed of any changes affecting compliance requirements.