On March 21, 2025, Financial Crimes Enforcement Network (FinCEN) issued a new Interim Reporting Rule (Interim Rule) which excludes domestic reporting companies[1] from the definition of reporting companies under the Corporate Transparency Act (CTA). Consequently, entities that fall under the definition of domestic reporting companies are not required to file any beneficial ownership information (BOI) reports about their beneficial owners (irrespective of whether such beneficial owners are United States Persons (US persons)[2] or non-US persons) under the Interim Rule.   

The changes implemented by the Interim Rule are consistent with prior announcements made by FinCEN and the U.S. Department of Treasury that the CTA would not be enforced against domestic reporting companies or their beneficial owners to reduce “the burden for lower-risk entities, including many U.S. small businesses, and prioritizing information on entities that “pose the most significant law enforcement and national security risks.”

The Interim Rule also exempts foreign reporting companies[3] from reporting any BOI for any of its beneficial owners that are US persons. Foreign entities registered to do business in the U.S. (by the filing of a document with a state secretary of state or similar office) still fall within the definition of “foreign reporting company” under the CTA. However, under the Interim Rule, only BOI for non-US person beneficial owners of a foreign reporting company is still required.  Any foreign reporting company that only has U.S. person beneficial owners is exempt from the CTA’s reporting requirements, like U.S. domestic reporting companies. Note that foreign reporting companies may also still qualify for other BOI reporting exemptions in the CTA (e.g., large operating entities, banks, money services businesses, insurance companies and others). Foreign pooled investment vehicles are also exempt from having to report the BOI of U.S. persons who exert substantial control over the entity, and only the BOI of non-U.S. persons who exert substantial control over the entity is required to be reported.

The practical application of the Interim Rule means that any non-US person wishing to anonymously engage in or do business in the United States, even potentially sanctioned persons or bad actors, can do so without providing any BOI about such person or any other beneficial owners under the CTA if they, or someone on their behalf, 1) creates an entity formed under the laws of a U.S. state or tribe, even in which they are a beneficial owner, or 2) invests in a foreign pooled investment vehicle where such individual does not exercise substantial control over the entity.  The Interim Rule’s intent of capturing foreign ownership cannot be reconciled with the availability of these simple workarounds.

Foreign reporting companies with non-US person beneficial owners that registered to do business in the U.S. prior to the date of publication of the Interim Rule (March 21, 2025) and are not eligible for any exemption must file the requisite BOI reports no later than 30 days from the date of publication of the Interim Rule, or April 20, 2025. Foreign reporting companies with non-US person beneficial owners that registered to do business on or after March 21, 2025 and are not eligible for any exemption from filing must file the BOI report within 30 days after receiving notice that such foreign reporting company’s US registration is effective.  

The Interim Rule does not provide any guidance or remedies on removing BOI or FINCEN identifiers previously submitted by companies which were formerly domestic reporting companies or about beneficial owners that are US persons. The Interim Rule expressly states that there is no requirement that previously submitted BOI of former domestic reporting companies or US persons be updated or corrected.

The Interim Rule is subject to public comment until May 20, 2025 (60 days from the date the Interim Rule was published). It remains to be seen whether the adoption of a Final Rule, challenges to the Interim Rule or active CTA litigation which is continuing will change the landscape once again. We will monitor these developments as they occur.