New deadlines approach for beneficial ownership reporting requirements in the US

As part of the US government’s focus on deregulation, beneficial ownership information (BOI) reporting requirements under the US Corporate Transparency Act (CTA), which came into force in January 2024, have been narrowed so that US entities are no longer required to report.

Importantly, because foreign reporting companies will still be subject to the new rules, all non-US entities registered to do business in any US state must familiarise themselves with the requirements and, if needed, take steps to comply before the new filing deadline of 25 April 2025.

Background

The CTA requires certain entities to file a report identifying its beneficial owners and other persons who helped register the entity. This report is to be filed with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), which has the authority to provide the information to other US government authorities and financial institutions.

As previously reported in an earlier Law-Now, the original deadline for filing BOI reports was 1 January 2025. This deadline was stayed by a court injunction following several legal challenges in US courts, and on 2 March 2025, the US Department of the Treasury announced it would streamline the reporting process, particularly for US entities and their US beneficial owners. On 21 March 2025, in response to the Treasury’s announcement, FinCEN published an interim final rule that significantly reduced the requirements for reporting BOI under the CTA. The interim rule was adopted and became effective on 26 March 2025.

Under the new interim rule, going forward FinCEN will not apply or enforce the CTA against US persons or US domestic reporting companies. Foreign reporting companies remain subject to the rules and have until 25 April 2025 to file their initial BOI reports and update or correct previously filed BOI reports with FinCEN.

Steps for foreign reporting companies to take

Foreign reporting companies subject to the new rules should take the following steps to ensure compliance with the CTA before 25 April 2025:

1. Determine reporting status: Assess whether your entity meets the definition of a ‘foreign reporting company’ under the interim final rule (see our explanation below). Verify if your entity or any beneficial owner qualifies for exemptions from the reporting requirements.
2. Prepare BOI reports: Gather all necessary information regarding the beneficial owners and corporate applicants of your entity, as applicable (see our explanation below).
3. File BOI reports by the new deadlines: If your entity was registered to do business in the US before 26 March 2025, file the BOI report with FinCEN by 25 April 2025. If your entity was registered on or after the publication of the interim final rule on 26 March 2025, file the BOI report within 30 calendar days after receiving notice that your registration is effective.
4. Monitor for changes and rule updates: Update your BOI report for any changes going forward. Although the interim final rule is in force, FinCEN intends to issue a further final rule by the end of 2025. Stay informed about any additional changes that may be issued by FinCEN.

Overview of the new requirements

The key changes to the CTA adopted on 26 March 2025 are as follows:

1. Only foreign reporting companies are required to report:
   • ‘Foreign reporting companies’ required to report are those formed under the law of a country other than the US and are registered to do business in any US state or tribal jurisdiction by filing a document with a secretary of state or similar office.
2. US entities and US persons are now exempt from reporting:
   • Going forward, all ‘domestic reporting companies’ (i.e. US entities created by the filing of a document, such as a certificate of incorporation, with a US secretary of state) and their beneficial owners are now exempt from requirements to report BOI to FinCEN.
   • US persons who are beneficial owners of a ‘foreign reporting company’ are also exempt from the requirements to report BOI to FinCEN. As a result, foreign reporting companies will not be required to report on US persons who are beneficial owners.
   • If a foreign reporting company only has US beneficial owners, it will still be required to submit certain information (see below) but will be exempt from the requirements to report on its beneficial owners.
3. New reporting deadlines:
   • Foreign reporting companies that do not qualify for an exemption must report their BOI to FinCEN by the deadlines noted above, which for foreign reporting companies registered to do business before 26 March 2025 will be no later than 25 April 2025.
   • The exemption is effective immediately and applies retroactively, meaning no penalties or fines will be enforced against US persons or domestic reporting companies for non-compliance with BOI reporting requirements in place prior to 26 March 2025.

Where and how to file a BOI report

Entities caught by the rules can use FinCEN’s BOI E-FILING website for reporting beneficial ownership information. The following information that must be filed:

• In relation to the foreign reporting entity, a tax identification number, home jurisdiction, current address and FinCEN ID (if applicable).
• In relation to beneficial owners (other than beneficial owners that are US persons), a FinCEN ID, legal name, date of birth, current address and a copy of a form of identification. A beneficial owner is an individual who either directly or indirectly exercises substantial control over the reporting company or owns or controls at least 25% of the reporting company. FinCEN expects that every reporting company will be substantially controlled by one or more individuals.
• In relation to ‘company applicants’ (i.e. a person who files the document registering a foreign reporting company for business in the US), a FinCEN ID, legal name, date of birth, current address, and a copy of a form of identification. A reporting company must report its company applicants only if it registered to do business in the US on or after 1 January 2024.

Failure to comply or file incorrectly 

The interim final rule does not update the penalties under the CTA. As previously drafted, there is a safe harbour under the CTA for corrections within 90 days. The penalties for non-compliance, however, are severe with civil penalties (approximately USD 500 per day) and criminal penalties (up to two years of imprisonment or a fine of up to USD 10,000) for individuals who wilfully violate the CTA's reporting requirements. In addition to the reporting entity, senior officers, beneficial owners and company applicants of a reporting entity may also be held accountable.

Looking forward

FinCEN anticipates that approximately 12,000 overseas companies will still need to file reports under the revised BOI reporting rules. There are also the following outstanding open questions:

• Further changes in final rule: FinCEN is soliciting public comments on the interim final rule until May 2025. We expect that the final rule will generally align with the interim final rule, but it remains open whether FinCEN will make further changes in response to received comments.
• Impact of litigation: Litigation challenging the constitutionality of the CTA and BOI reporting rules remains ongoing in multiple jurisdictions. The outcome of these cases may affect the scope or enforceability of the CTA.
• Contractual commitments: Many companies have made contractual commitments to submit BOI reports to FinCEN in commercial agreements. Depending on the language used, some entities may remain contractually bound to submit reports, notwithstanding the rule changes.
• FinCEN identifiers: The interim final rule does not address the requirements related to FinCEN identifiers and there is not yet guidance for how individuals (particularly US persons who have obtained a FinCEN identifier) may deactivate their FinCEN identifiers.

CMS is helping clients prepare for the BOI regime and guiding them through the process. For more information or to discuss how the CTA will affect your business with a member of the CMS team, contact your CMS client partner or either of the authors.