On March 21, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) introduced an interim final rule (the March 21 Rule) that brings notable changes to the Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA). This rule significantly narrows the scope of entities required to report BOI and extends the compliance deadline by 30 days.
FinCEN has opened a 60-day comment period on the March 21 Rule and plans to issue a final rule later this year.
Background on the BOI Reporting Requirements
The CTA’s BOI Rule mandates that reporting companies disclose information about their beneficial owners to a national corporate registry. Initially, reporting companies were classified into two categories:
Domestic Reporting Companies: Entities created by filing a document with a secretary of state or similar office in a U.S. state.
Foreign Reporting Companies: Entities established under foreign law and registered to conduct business in the U.S. by filing with a secretary of state or equivalent authority.
The original BOI Rule also outlined 23 exemptions, covering entities such as registered investment advisers, certain exempt reporting advisers, qualifying pooled investment vehicles, large operating companies, and subsidiaries of most exempt entities.
Legal Challenges and Regulatory Responses
Since its introduction, the BOI Rule has faced legal opposition and conflicting federal court decisions, leading to a series of regulatory updates:
February 19, 2025: FinCEN announced an extension of the BOI Rule’s reporting deadline to March 21, 2025, for most reporting companies.
February 27, 2025: FinCEN stated it would not enforce penalties against companies failing to report by March 21 and signaled its intention to extend the reporting deadline.
March 2, 2025: The Treasury Department indicated plans to revise the BOI Rule to limit its scope to foreign reporting companies only.
Key Provisions of the March 21 Rule
The March 21 Rule introduces the following changes:
Exemption for Domestic Reporting Companies: Domestic reporting companies and their beneficial owners are no longer required to file initial BOI reports or update/correct previously filed reports.
Limited Reporting for Foreign Reporting Companies: Foreign reporting companies and their U.S. person beneficial owners are not required to disclose the BOI of U.S. persons.
Continued Reporting for Certain Foreign Entities: Foreign reporting companies, excluding U.S. persons, must submit BOI reports. However, the extended deadline is 30 days from the publication of the March 21 Rule in the Federal Register or 30 days after their U.S. registration, whichever is later.
Next Steps for Reporting Companies
With the March 21 Rule in effect, most entities previously classified as reporting companies under the CTA are exempt from BOI reporting obligations. The rule also limits the scope of information required for the remaining foreign reporting companies.
Given the ongoing legal challenges to the BOI Rule, domestic and foreign reporting companies should stay informed of further regulatory developments and potential adjustments to compliance requirements by regularly checking the FinCEN website.
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